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Terms of Appointment 

1 . I was appointed on the twenty-fifth day of May 1964 in the following terms: 

Whereas St. Martin Preserving Company Limited, by special resolution dated 25th Novem- 
ber 1963, has declared that its affairs ought to be investigated by an inspector appointed by the 
Board of Trade. 

Now, therefore, the Board of Trade, pursuant to the provisions of section 165(a) (i) of the 
Companies Act 1948, hereby appoint Mr. John Dennis Russell, M.A., F.c.A. of 121 Queen Victoria 
Street, London EC 4 to act as inspector to investigate the affairs of the above-named company 
and to report thereon in such manner as the Board may direct. 



Background to Appointment 

2. The Company was formed in 1927 as Branston Artificial Silk Company Limited to undertake 
the manufacture of rayon textiles. Market quotations for the whole of the Company’s share 
capital were obtained at the time. The textile business ceased in January 1937 when the factory 
was sold to the Government. Jn November 1937 the Company acquired the whole of the under- 
taking of Slough Preserving Company Limited, and its name was changed to St. Martin Pre- 
serving Company Limited (‘St. Martin’). Through a series of acquisitions and mergers between 
1937 and 1963 St. Martin became the holding company in a group of companies whose subsidiary 
relationship is set out in appendix A annexed hereto. All the companies, with two exceptions, 
are or were engaged in the food industry. 

3. This report is mainly concerned with the four principal companies in the group, namely 
St. Martin and T. G. Tickler Limited (‘Tickler’), both preserve manufacturers, Foster Clark 
Limited (‘Foster Clark’), canners of fruit and vegetables, and Atholl Houses Limited (‘Atholl’), 
building contractors. 

4. The various transactions by which the principal companies were merged into one group with 
St. Martin as the holding company covered a period of a little over four years from 1956 to 
early in 1960, and I refer later in this report (paragraphs 65 to 89) to the steps by which the com- 
panies were brought together. At one time in 1959 the price of St. Martin’s shares on the Stock 
Exchange, London indicated a value for the group of over £1,500,000. The Stock Exchange 
quotation was cancelled on 3rd April 1964. 

5. In 1961 the group began to experience financial difficulties which increased during 1962. 
Substantial trading losses were suffered and by the end of 1962 St. Martin, Foster Clark and 
Atholl were all heavily indebted to their respective banks. The overdrafts of St. Martin and 
Foster Clark were secured by debentures. Early in 1963 Mr. S. R. Hogg, d.s.o., M.C., F.c.A. 
was appointed receiver and manager of St. Martin by The National Commercial Bank of 
Scotland Limited and Mr. C. E. M. Hardie, c.b.b., f.c.a. was appointed receiver and manager 
of Foster Clark by Westminster Bank Limited. Another bank, namely the Bank of Scotland, 
had advanced substantial sums to Atholl without security, and held a guarantee from St. Martin. 

6. Mr. Hogg, as receiver and manager of St. Martin, has continued that company’s business of 
preserve manufacturing through the medium of its 99 per cent owned subsidiary Tickler, to 
which had been transferred St. Martin’s goodwill and undertaking, including all its trading 
assets. A scheme of arrangement under section 206 of the Companies Act 1948, effecting a 
reduction of the Tickler share capital, was approved in 1965. 

7. Mr. Hardie, as receiver and manager, continued the food canning business of Foster Clark 
until 1965 when that company’s trading stock and other assets in the United Kingdom were 
sold. 

8. In the course of his duties as receiver and manager of St. Martin, Mr. Hogg realised the 
group’s investment in Atholl, the whole of whose share capital was held by Tickler and this 
transaction has been severely criticised by Mr. R. N. Scott, chairman of St. Martin. Mr. Scott’s 
desire for an independent investigation into the circumstances and the terms of this transaction 
led to the following special resolution which was passed by the members of St. Martin on 25th 
November 1963: 

That the company declares that its affairs ought to be investigated by an Inspector appointed 
by the Board of Trade pursuant to section 164 or 165 of the Companies Act 1948 by reason of 
matters set out in the circular to members dated the 2nd November 1963 and with particular 
reference to the sale of Atholl Houses Ltd., the settlement of that company’s debts, any agree- 
ments, arrangements or unwritten understanding with the Bank of Scotland or any insurer of 
the creditors of Atholl Houses Ltd. 

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The circular to which reference is made in the above resolution accompanied the notice of the 
meeting and was signed by Mr. Scott as chairman of St. Martin. A copy of the circular is 
annexed hereto marked appendix B. 

9. In the view of the Board of Trade an investigation to discover whether a receiver has 
exceeded or abused the powers conferred on him by a debenture was not within either section 164 
or section 165 of the Companies Act 1948 and they indicated that they had no power to appoint 
an Inspector for this purpose. On application by St. Martin to the High Court, however, 
judgment was given on 5th May 1964 requiring the Board of Trade to appoint an inspector 
pursuant to section 165(a) (i) — that is to say, following a special resolution by the company — 
and, as stated above, I was appointed inspector on 25th May 1964. 

10. It should be noted that the terms of my appointment were not limited to investigation of 
the sale of Atholl shares. Nevertheless, in view of the origin of my appointment I have directed 
my attention primarily to, and the greater part of my report is concerned solely with, the Atholl 
transaction. The remainder of my report deals with the steps by which the principal companies 
in the Group were brought together. 



The sale of Atholl Houses Limited 



Result of Investigation 

1 1. My conclusions on the Atholl transaction are summarised in paragraph 64 of this report. 
After considerable investigation I have formed the opinion that Mr. Scott’s criticisms of the 
transaction were not justified. 



Background to the transaction 

12. In order to appreciate the need for a sale and the terms of the sale of the shares of Atholl 
in 1963 it is necessary to put the transaction in perspective by referring to some of the events 
leading up to it. 

13. Atholl was formed in 1944 for the purpose of building contracting and I am informed 
that by 1955 it had established a good reputation in the building industry in Scotland. The 
share capital of Atholl was acquired by Mr. Scott in 1956, and he subsequently transferred his 
shares to Tickler, which is now a subsidiary of St. Martin. 

14. During the period of about 10 years up to 1962 Atholl was largely engaged in substantial 
development work for local authorities, mainly in the Glasgow area. It also undertook a small 
amount of private speculative building. Atholl’s main source of finance was the Bank of 
Scotland which had been its bankers for many years, but, as might be expected, the contracts 
with local authorities provided for substantial interim payments on account of work in progress. 

15. Atholl’s scale of operations increased substantially in 1960, and by 1962 the cumulative 
value of work in progress (before deducting cash received on account) was understood to be 
in the region of £11,000,000. By the end of 1962 overdraft facilities granted by the Bank of 
Scotland had been increased by stages to £1,000,000. This liability was unsecured but it was 
guaranteed by St. Martin up to £900,000, and St. Martin had also made substantial direct 
advances to Atholl, but the amounts so advanced were unknown to the bank. 

16. The Bank of Scotland, which was accustomed to receiving regular information about 
Atholl’s activities and financial position before Mr. Scott acquired the share capital, found it 
increasingly difficult to obtain up-to-date information on which to base credit decisions. At 
the end of 1962 Atholl was seeking a further increase in its overdraft facilities and in this con- 
nection the Bank of Scotland appointed Messrs. Thomson McLintock & Co., Glasgow, chartered 
accountants, to examine and report on Atholl’s financial position. 

17. In an interim report dated 15th January 1963 Thomson McLintock & Co. stated that the 
financial position of Atholl depended to a critical extent on the value of the work in progress 
and that they were unable to express any worth-while opinion of that value. Draft accounts 
at 31st March 1962 submitted by Atholl, showed total net assets of £259,000 but this figure was 
arrived at after taking into account cumulative work in progress valued by Atholl at about 
£11,000,000 (before deducting cash received on account) and only a very small percentage 
reduction in the value of the cumulative work in progress would have eliminated the shareholders’ 
funds in Atholl. Accordingly, the Bank of Scotland requested Messrs. John Dansken & 
Purdie, chartered quantity surveyors, to examine the basis of Atholl’s valuation of work in 
progress. In a first report dated 4th February 1963 John Dansken & Purdie concluded their 
preliminary observations by stating: ‘It appears that the balance sheet amounts are optimisti- 
cally presented’. 

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18. In February 1963 there was no doubt that Atholl was in a serious financial position through 
lack of working capital. Trade creditors were pressing and many had issued writs against 
Atholl. Sub-contractors were complaining that they had not received their share of the pro- 
gress payments made to Atholl. It was feared that, if the local authorities enforced their 
rights to take over the work in progress, substantial claims for damages would arise. 

19. By this time the bank overdraft had increased to £1,169,000 and direct advances by St. 
Martin had increased to about £745,000. The Bank of Scotland was not willing to provide 
further finance for Atholl, and Mr. Hogg, who had by this time been appointed receiver and 
manager of St. Martin, had no funds available for the purpose. On the other hand it was 
evident to both that in the interest of creditors liquidation of Atholl must be avoided if at all 
possible. 

20. Accordingly it was agreed between the bank and Mr. Hogg that the creditors should be 
asked to accept a moratorium for two months to give more time for a detailed examination of 
Atholl’s financial position on which to base a future course of action. The Bank of Scotland 
agreed to provide further finance on certain conditions during the moratorium. 

21. In a circular to the creditors of Atholl dated 26th February 1963 Mr. Hogg outlined the 
facts as he had found them on his appointment and asked for agreement to a moratorium until 
30th April 1963. This circular referred to arrangements made for John Dansken & Purdie to 
examine the work in progress and Thomson McLintock & Co. to prepare a statement of affairs 
forthwith. The creditors agreed to this moratorium. 

Financial position of Atholl at 28th February 1963 

22. On 10th April 1963 John Dansken & Purdie submitted to the Bank of Scotland a report on 
the work in progress at 28th February 1963, valuing it at £699,365 (after deducting cash received 
on account). Thomson McLintock & Co. prepared a further report dated 16th April in- 
corporating an approximate balance sheet of Atholl as a going concern at 28th February 1963 
which, taking work in progress into account at John Dansken & Purdie’s valuation, showed a. 
deficiency of assets amounting to £1,517,519. This approximate balance sheet may be sum- 
marised as follows : 



£ 

Fixed assets, including loose tools and shares in subsidiary, at net book values . . . 219,065 

Work in progress ... 699,365 

Other current assets 143,631 



1,062,061 

Lew Current liabilities, including bank overdraft 2,579,580 



Deficiency of assets to meet liabilities £1,517,519 



23. In addition, Thomson McLintock & Co. submitted on 17th April a draft statement of 
affairs at 28th February 1963 on a liquidation basis assuming loss of retention monies and 
making provision for substantial claims which might be expected to arise in a winding up. 
This statement of affairs showed a deficiency of £11,000 as regards preferential creditors 
(including the bank at £318,000), and a deficiency of £2,711,000 as regards unsecured creditors. 

24. It was clear to the bank and to Mr. Hogg that the financial position of Atholl was desperate. 
Not only did it appear that Atholl was completely insolvent but current work could not be com- 
pleted without considerable further funds. It seemed inevitable that Atholl would have to go 
into liquidation with consequent heavy losses to trade creditors, the Bank of Scotland and St. 
Martin. 

25. The evidence which I have received leads me to think that one reason for Atholl’s serious 
financial position was that the company tendered for and undertook substantial building 
contracts on terms which were unremunerative. In addition, however, I have no doubt that 
Atholl was trading on a scale which was not only beyond its financial resources, but also beyond 
the capacity of its management and organisation. Atholl had no proper costing system for 
recording expenditure on individual contracts. 

Impending liquidation of Atholl 

26. Towards the end of April 1963 Mr. Hugh C. Stenhouse, o.b.e., of Glasgow, who had 
previously been approached by Mr. Scott in the hope that he might put up some funds to assist 
Atholl, came forward with proposals for purchase of the shares at a purely nominal sum in the 
hope of saving creditors from the serious consequences of liquidation. These proposals, which 

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were somewhat similar to those which were subsequently agreed for the sale of Athol 1 referred 
to below, were explained in Mr. Hogg’s circular letter to creditors dated 29th April 1963, a 
copy of which is annexed hereto marked appendix C. The circular incorporates a statement 
of assets and liabilities showing comparative figures (a) based on the approximate balance sheet 
on a going concern basis and (b) based on the draft statement of affairs on a liquidation basis, at 
28th February 1963, prepared by Thomson McLintock & Co. for the Bank of Scotland. One 
of the conditions precedent to an offer by Mr. Stenhouse was that Mr. Scott should resign from 
the board of Atholl, but Mr. Scott refused to do so and the proposals were withdrawn. 

27. At the beginning of May 1963 the Bank of Scotland approached Sagit Trust Co. Limited 
(‘Sagit’), an industrial holding company in London which is a substantial shareholder in 
A. A. Stuart & Sons (Contractors) Limited (‘Stuart’), a public company engaged in building 
contracting in the West of Scotland, with a view to the possibility of Stuart buying Atholl. 
After some hesitation the management of Stuart agreed to make an offer provided that Mr. 
Scott first resigned from the board of Atholl. The management of Stuart have informed me 
that although they hoped that by purchasing Atholl their company might eventually make 
some profit out of the transaction, their principal desire was to avoid the liquidation of Atholl 
which might have had an adverse effect on their own business. 

28. The moratorium during which the bank advanced £183,000 ended on 30th April 1963. 
Thereafter the bank met various specific requests for further finance until it was agreed on 
8th May that the bank would pay wages for the three weeks ending 10th, 17th and 24th May 
1963 and provide up to £10,000 for purchases from sub-contractors and suppliers during that 
period. This post-moratorium finance totalled £30,000. A creditors’ committee which had 
been formed made it known to Mr. Scott that unless he resigned from the board of Atholl 
liquidation proceedings would be started. Mr. Scott did not resign and on 24th May 1963 
Mr. John Waldie, c.a., the partner in Thomson McLintock & Co. who had been consulted 
by the bank, was appointed provisional liquidator of Atholl on the petition of the Inland 
Revenue. 

29. Through lapse of time the bank’s potential preferential claim of £318,000 at 28th February 
had been reduced by 24th May 1 963 to about £246,000, which appeared to be covered by avail- 
able assets. After this reduction (assuming that moratorium and post-moratorium bank 
finance produced additional assets of equivalent realisable value), unsecured creditors might 
have received a dividend of 1 s. 5d. in the £ but much would have depended on negotiations with 
local authorities in connection with damages for failure to complete work on hand. On the 
basis of a dividend of Is. 5d. in the £, and taking into account the bank’s preferential claim and 
priority for repayment of moratorium and post-moratorium finance, it appears that the bank 
might have recovered in a liquidation a maximum of £356,000 out of total advances of about 
£1,382,000. The bank placed little value on the guarantee by St. Martin and was anxious to 
avoid liquidation of Atholl which might have had serious repercussions on those of the bank’s 
customers who were unsecured creditors. 

The Sale Agreement 

30. The suggested transaction for the sale of Atholl was referred by the Bank of Scotland to 
Mr. Hogg, and was approved by him. The terms may be summarised as follows : 

(i) Stuart to purchase from Tickler all the issued shares of Atholl for a total of £1. 

(ii) Tickler to pay Atholl £81,000 in settlement of the amount owing to Atholl of approxi- 
mately this amount. 

(iii) Atholl to pay to St. Martin £81,000 in settlement of the amount owing to St. Martin 
of approximately £745,000. 

(iv) Stuart to pay 5s. in the £ to the trade creditors of Atholl including other companies in 
the St. Martin Group. 

(v) The Bank of Scotland to agree to a reduction in its unsecured guarantee by St. Martin 
of AtholPs overdraft from £900,000 to £500,000. 

This transaction did not involve any reduction in the overdraft. As indicated in paragraph 
55, however, an arrangement for further finance provided for deferment of all existing bank 
advances. 

31. It will be seen that the transaction depended on the acceptance by trade creditors of 5s. 
in the £ of their claims against Atholl. In a circular letter to the creditors dated 7th June 1963, 
which is reproduced at Appendix D, the solicitors acting for the creditors’ committee gave details 
of the proposals to pay them out and recommended acceptance. By 18th June 1963 over 90 
per cent of the creditors had indicated approval. 

32. On 21st June 1963 Mr. Scott was removed from the board of Atholl by a special resolution 
passed by the shareholders of Atholl. Thereupon Stuart finally agreed to purchase Atholl and 

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on 29th June 1963 made a firm offer to the creditors of Atholl to acquire their claims for 5s. in 
the £ which was accepted. The sale agreement whereby Stuart acquired the share capital of 
Atholl was executed on 30th July 1963 between Tickler and St. Martin (by its agent Mr. Hogg as 
receiver) on the one hand, and Stuart on the other. A copy of the sale agreement is annexed 
hereto at appendix E. On the signing of this agreement Mr. Waldie retired from his appoint- 
ment as provisional liquidator. 

Criticisms by Mr. Scott 

33. From the time when consideration was first given to the disposal of Atholl up to completion 
of the sale, and even thereafter, Mr. Scott made many comments and complaints about the 
transaction to the various parties concerned. He set out his criticisms in the circular to share- 
holders dated 2nd November 1963 (reproduced in appendix B). 

34. Mr. Scott challenged the transaction on the grounds that, although St. Martin received 
£81,000 in settlement of its large claim against Atholl and a reduction of £400,000 in its liability 
under guarantee to the bank, the group was not receiving a fair price for the shares. He criticised 
various aspects of the transaction but he placed the greatest emphasis on what he regarded as 
too low a value for work in progress which was taken into consideration when the terms of the 
sale were agreed. 

Valuation of work in progress 

35. The valuation of work in progress is normally based primarily on, and does not usually 
exceed, the costs actually incurred, deduction being made for cash received on account, but in 
the case of work done under long term contracts it may also be reasonable to include a pro- 
portion of the profit earned to date. In all cases it is important to provide for losses by ensuring 
that the valuation does not exceed the proceeds of sale after making full provision for expenses 
of completion, sale and distribution, or installation, as the case may be. Accordingly, for any 
but the simplest operations a reliable valuation of work in progress depends to a large extent on 
the availability of detailed records. AtholPs records at 28th February 1963 were not adequate 
for this purpose. 

36. John Dansken & Purdie examined such of AtholPs records as were available but in the 
absence of reliable costs and estimates they thought it best to base their valuation on certificates 
of the value of measured work obtained by Atholl from employers’ (customers’) surveyors for 
the purpose of interim payments. Their valuation (referred to in paragraph 22) may be sum- 
marised as follows : 



Work in progress representing retentions and outstanding amounts £699,365 



37. Interim certificates on which John Dansken & Purdie based their valuation took no account 
of unmeasured work, which would vary from time to time, and according to John Dansken & 
Purdie this might amount to as much as 4 per cent of the total work measured, i.e. in this case 
a maximum of £442,500. Having been given no detailed estimates of further expenditure to 
complete the contracts or of the likely profit or loss on each contract, John Dansken & Purdie 
thought it best to make no addition for unmeasured work in their valuation. They made the 
position clear in their report and in the circumstances I find no grounds for criticism of the 
procedure which they adopted. 

38. The report by Thomson McLintock & Co. dated 16th April 1963 did not repeat the 
references made by John Dansken & Purdie to unmeasured work but the bank had received the 
report of John Dansken & Purdie and a copy was sent to Mr. Hogg who was therefore aware of 
the position. 

39. The valuation by John Dansken & Purdie of work in progress at £699,365 was taken into 
account in the terms of the sale of Atholl. Mr. Scott’s main criticism of the transaction is 
that by disregarding the value of unmeasured work to which he attributed a value of over 
£1,000,000 the St. Martin Group did not receive a fair price. 

40. For the purpose of demonstrating that an insufficient value was attributed to work in 
progress Mr. Scott adopted a different approach and calculated the value by reference to 



Measured work based on interim valuations 
Less cash received on account 



£ 

11,064,025 

10,381,006 



Amounts outstanding on finally settled contracts 



683,019 

16,346 



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tender prices and estimated costs of completion. His calculations, set out in a letter to Mr 
Hogg dated 10th July 1963 may be summarised as follows: 



Aggregate tender values of contracts 


14,847,514 


Less Amounts certified 


10,318,170 




4,529,344 


Less Estimated costs of completion 


3,255,000 




1,274,344 


Less 10 % contingency for variations 


127,434 


Unmeasured work 


1,146,910 


Add retentions and current amounts due 


710,433 


Work in progress 


... £1,857,343 



These figures are not entirely comparable with those of John Dansken & Purdie who included 
certain contracts which were treated by Mr. Scott as completed. It will be seen, however, that 
Mr. Scott’s valuation at £1,857,343 exceeds that arrived at by John Dansken & Purdie by some 
£1,158,000 and that the value which he attributes to unmeasured work is over 1 1 per cent of the 
value certified. 

41 . If the basic information were reliable, Mr. Scott’s method of valuation would be acceptable, 
subject to deduction being made for profit carried forward and profit not yet earned on work 
still to be done. The contracts in question, however, were made at fixed prices and the evidence 
which I have seen leads me to think that they were unprofitable; if this were so such a method of 
valuation would have the merit of making provision for losses. On the other hand, a valuation 
by this method depends very largely on the accuracy with which costs of completion can be 
assessed and although Mr. Scott has produced an analysis of the other figures, contract by 
contract, I have seen no detailed working papers to support Mr. Scott’s estimate of the costs of 
completion. 

42. In Mr. Scott’s circular of 2nd November 1963 (reproduced in appendix B) he includes 
work in progress at 28th February 1963 in estimate A, at the valuation made by John Dansken 
& Purdie plus an allowance for unmeasured work at 4 per cent, and in estimate B, at figures 
put forward by himself totalling £1,856,865. The ‘profit to purchaser’ shown in Mr. Scott’s 
estimates A and B depends on substantial allowances for unmeasured work which he describes 
as ‘estimated work in progress’. 

43. The contracts which were in progress at the time of the Atholl transaction have now 
nearly all been completed under Stuart’s management and it has been possible to establish 
within reasonable limits the eventual proceeds and the further expenditure which was required, 
with a view to obtaining a retrospective valuation of the work in progress at 28th February 
1963. In this I have been assisted by Mr. Waldie of Thomson McLintock & Co. and Mr. J. E. 
Hiscock, managing director of Stuart. By applying Mr. Scott’s method of calculation to the 
figures as they were seen to be materialising at 30th September 1965 work in progress at 28th 
February 1963 is now calculated to have had a negative value of £247,713. My revised cal- 
culation is shown below, with comparative figures from Mr. Scott’s calculation for easy 
reference: 



Mr. Scott’s 
figures 
£ 

14,847,514 

127,434 


Aggregate tender value of contracts 

Less variations 




Revised 

calculation 

£ 

15,349,565 

1,217,626 


14,720,080 






14,131,939 


10,318,170 


Less amounts certified 




. 10,913,176 


4,401,910 






3,218,763 


3,255,000 


Less costs of completion 




4,176,909 


1,146,910 

710,433 


Retentions and current amounts due 


Minus 


958,146 

710,433 


£1,857,343 


Work in progress at 28th February 1963 


... Minus 


£247,713 



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44. The revised aggregate tender value of contracts includes certain contracts in progress 
which Mr. Scott treated as completed for the purpose of his calculation. The amounts certified 
have been increased accordingly. The variations represent differences in specification and 
measurement from those on which tenders were based and these involved reductions sub- 
stantially greater than the contingency provision made by Mr. Scott. 

45. Costs of completion have also proved to be substantially greater than Mr. Scott’s estimate. 
Messrs. W. M. Kesson & Co., chartered accountants, the present auditors of Atholl, have 
confirmed to me that the expenditure charged against these contracts since the Stuart manage- 
ment took over in 1963 includes only charges which may be properly made against these con- 
tracts and that no expenditure properly chargeable to other companies or other work has been 
included in the figure of £4,176,909. 

46. Although the above calculation indicates that work in progress had a negative value of 
£247,713 it would not be reasonable to accept this figure without reservation when judging the 
propriety of the Atholl transaction. The contracts were all undertaken at fixed prices which 
should have allowed for increases in cost in the normal course of completion. The difficulties 
of 1962 and 1963, however, delayed the work considerably and inflation will have had a much 
greater effect than might reasonably have been expected at the time of the sale. It is impossible 
to be precise but if an allowance of, say £625,000, i.e. about 15 per cent of the total expenditure, 
is made for additional costs arising from unforeseeable circumstances, it appears reasonable 
to regard a maximum of about £380,000 as the value attributable to work in progress at 28th 
February 1963 for the purpose of the Atholl transaction. 

47. For certain contracts final accounts have not yet been agreed and the maintenance period 
has not yet expired so that the final outcome still cannot be calculated precisely. Nevertheless, 
it appears to me that the value of work in progress which was taken into consideration at 
£699,365 on the basis of information available when the terms of the sale of shares were agreed 
can now be regarded as excessive to the extent of at least £300,000. I am satisfied that the 
consideration for the sale was not too low on account of the value attributed to work in progress. 

Continuance of bank guarantee 

48. Mr. Scott has particularly criticised the continuance of the guarantee by St. Martin of the 
advances owing by Atholl to the Bank of Scotland, albeit at a reduced figure. 

49. It should be remembered, however, that at the time of the sale in July 1963 the financial 
position of Atholl was disastrous. By then the Bank of Scotland had advanced to Atholl a 
total of about £1 ,475,000 including £93,000 for the provisional liquidator. Of this amount the 
bank could not recover in a liquidation more than £413,000 taking into account preferential 
claims at £339,000 and moratorium priorities worth £32,000. It would be natural to expect 
the bank to seek to reduce its potential loss by preserving its rights under the guarantee for the 
full amount of £900,000. 

50. Although it was in the interests of St. Martin to reduce as far as possible a potential 
liability, particularly if it were to depend on the management of a company which was no longer 
a subsidiary, Mr. Hogg, as receiver and manager of St. Martin, could do nothing to achieve 
such a reduction without the concurrence of the bank. In the event of liquidation of Atholl, 
St. Martin would have been called upon to pay up the whole amount of £900,000 under its 
guarantee and would not have recovered on its unsecured claim of about £745,000 against 
Atholl more than £28,000 as compared with the £81,000 which it received from Atholl under 
the sale agreement. It appears to me that Mr. Hogg had no alternative to accepting contin- 
uation of the bank guarantee at the reduced figure of £500,000. 

Offer by shareholders 

51 . In Mr. Scott’s circular of 2nd November 1963 (reproduced in appendix B) he refers to an 
offer to Mr. Hogg by a committee of St. Martin shareholders to purchase all that company’s 
interests in Atholl and complains that this offer was not given proper consideration. 

52. The shareholders concerned were Sir Alfred Beit, Mr. Scott, Overseas American Finance 
Co. Limited, controlled by Mr. Scott, and MacNeill & Son Limited, controlled by Sir Alfred 
Beit. Together these shareholders held approximately 35 per cent of the shares of St. Martin 
at that time. 

53. These shareholders offered to purchase the Atholl shares for £500 and the beneficial 
ownership of Atholl’s debt of £745,000 to St. Martin for £82,000, it being a condition that 
Tickler should pay to Atholl the amount of £81,1 10 owing to that company. It was provided 
that ‘any benefit or equity’ arising from this offer was to be held in trust for all the registered 
shareholders of St. Martin subject to a first charge in favour of the shareholders making the offer 
in respect of any cash advances made by them in connection with the offer. 

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54. In comparison with the offer made by Stuart this shareholders’ offer would have benefited 
the remaining St. Martin group by an amount of £499 in the consideration for the Atholl shares, 
and by £890 in the settlement of amounts owing from Tickler to Atholl and from Atholl to 
St. Martin. On the other hand the shareholders’ offer made no provision for the trade creditors 
of Atholl or for the Bank of Scotland, and it did not provide for any reduction in the bank 
guarantee given by St. Martin for £900,000. No reference was made to the additional funds 
required to complete the contracts. I am satisfied that Mr. Hogg acted properly in rejecting 
this offer in favour of the offer made by Stuart. 

Arrangement for further finance 

55. Before Stuart purchased Atholl an arrangement was made for the further finance which 
was required to complete the work on hand at the time of the transaction. In addition to the 
advances totalling £1,169,000 at 28th February 1963 the Bank of Scotland had provided £183,000 
of moratorium finance, £30,000 of post-moratorium finance and £93,000 for the provisional 
liquidator, namely a total of £1,475,000. It was agreed that the further funds required should 
be put up by the bank and Sagit (the industrial holding company which has a large shareholding 
in Stuart) on the following terms: 

(i) Sagit to make available to Atholl up to £300,000 until completion of the current 
contracts, i.e. those open at 8th August 1963. 

The bank to provide facilities up to £100,000 as finance additional to the above 
£300,000. 

(ii) Immediately after 8th August 1963 Sagit to procure Atholl to pay: 

(a) The fees and outlays of the provisional liquidator. 

(b) The debts of the preferential creditors, excluding the bank, in full amounting to 
approximately £33,000. 

(c) The debts of the trade creditors at 5s. in the £. 

(iii) Sagit to procure Atholl to complete current contracts expeditiously and economically. 

(iv) On completion of the current contracts, the then net current assets of Atholl to be 
distributed in the following order: 

(a) In repaying the finance provided by the bank under (i) above, with interest. 

(b) In repaying the finance provided by Sagit under (i) above, with interest. 

In paying Sagit a fee as financial advisers of £10,000 for each year or part year they 
act as such, subject to a maximum of £20,000. 

(c) In paying to Stuart as managers a fee of £50,000 for each year or part year they 
act as such, subject to a maximum of £100,000. 

(d) In paying the whole balance up to a total of £600,000 to the bank in repayment of 
Atholl’s outstanding overdraft. 

Provided that Sagit in its sole discretion can agree to this maximum being raised to 
£650,000. 

Any balance remaining thereafter to be shared equally between the bank and Sagit. 
The bank to accept the payments made to it hereunder and under paragraph (vi) 
below in full discharge of Atholl’s outstanding overdraft and interest. 

(v) Any new contracts to require prior approval of the bank and be separately recorded. 

(vi) On completion of the current contracts, Sagit to pay the bank one half of the value of 
the fixed assets of Atholl as taken over at 8th August 1963. 

The above arrangement was set out in a letter dated 8th August 1963 addressed by the solicitors 
acting for the Bank of Scotland to the solicitors acting for Sagit and a copy of this letter is 
annexed at appendix F. 

56. As will be seen, this arrangement for further finance, and its repayment, authorised fees 
and laid down terms for repayment of sums previously advanced by the bank. This is the 
only agreement which might be described as a ‘sharing arrangement’, such as that questioned 
by Mr. Scott in his circular of 2nd November 1963 (reproduced in appendix B), and I am satisfied 
that there was nothing improper in it. Indeed, by entering into this arrangement the bank 
sacrificed its preferential claims estimated at £339,000 and priority for repayment of other 
moratorium and post-moratorium finance totalling £32,000. 

Other matters raised by Mr. Scott 

57. Mr. Scott has suggested that the investigation should include an enquiry into any arrange- 
ment which might have been made with insurers of the creditors of Atholl. I am informed 

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that no such arrangement, other than for continuation of credit insurance, was made by any of 
the parties to the Atholl sale agreement. 

58. Mr. Scott has also suggested that what he regards as unsatisfactory features in the Atholl 
transaction might be attributable to other business relationships between the parties or their 
representatives. I am satisfied that the interests of St. Martin have not been adversely affected 
by any such relationship. 

Financial position of Atholl at 30th September 1965 

59. I have received from Mr. Waldie of Thomson McLintock & Co. a report on the operating 
results of Atholl for the period from 1st March 1963 to 30th September 1965. From this report 
I have extracted and attach hereto, marked appendix G, a summarised approximate operating 
statement for the period, and, marked appendix H, a summarised draft balance sheet at 30th 
September 1965. These statements show that Atholl’s total deficiency has increased from 
£1,517,519 to £2,055,692 even after cancellation of amounts totalling £645,924 owing to St. 
Martin and others. 

60. The bank provided in full the facilities of £100,000 required by paragraph (i) of the arrange- 
ment for further finance and as will be seen from appendix H this finance has been reduced to 
about £53,000. With this exception no payments under paragraph (iv) of the above arrangement 
for further finance have yet been made to either the bank, Sagit or Stuart. On the evidence 
at present available it appears that the bank is unlikely to receive more than repayment of this 
balance of £53,000 and its half share, approximately £52,000, of the fixed assets to be valued on 
completion of current contracts. On present estimates Sagit will recover the major part of its 
advance of £300,000 but it appears unlikely that any funds will be available for payment of 
the fees owing to Sagit and Stuart. It will be noted that no payment can be expected under 
heading (iv)(d) of the arrangement. 

61. By comparison with the preferential and unsecured claims which might have been worth 
about £413,000 in a liquidation the bank now appears likely to recover only about £52,000 of its 
aggregate advances of £1,475,000. 

62. In contrast to the ‘profit to purchaser’ shown in estimate A at £622,920, and estimate B at 
£1,337,920, in Mr. Scott’s circular to shareholders dated 2nd November 1963 it appears that 
Stuart will make no profit at all. It is unlikely that either Sagit or Stuart will receive any of their 
fees agreed at a maximum of £120,000. 

63. The share capital of A tholl appears to be worthless even after taking into account the com- 
position with the unsecured trade creditors and the releases granted by the bank. Atholl’s 
trading losses, totalling about £2,000,000 might have some value for tax purposes if admitted 
by the Inland Revenue for set-off against future profits earned in the same type of business. 
The circumstances lead me to think that the value of the tax loss is problematical and in my 
opinion it should be left out of account when considering the financial result of Sagit’ s rescue 
operation. 

Conclusions on the Atholl transaction 

64. I have come to the conclusion that Mr. Scott’s criticisms of the Atholl transaction were 
unfounded, and in particular I have satisfied myself on the following matters : 

(a) Without substantial sources of additional finance to complete the contracts the only 
alternative to a sale of the shares was liquidation of Atholl in which unsecured trade 
creditors could not have received a dividend of more than Is. 5d. in the £. 

(b) The offer which was accepted was the best offer available; it made provision for a pay- 
ment of 5s. in the £ to unsecured trade creditors of Atholl and for a reduction in the 
liability of St. Martin under guarantee. 

(c) There was nothing improper in the arrangement for obtaining additional finance after 
the sale; this was a ‘sharing arrangement’ only to the extent of laying down terms for 
repayment of sums previously advanced. 

(d) No improper arrangement was made with insurers of Atholl creditors by any of the 
parties to the Atholl sale agreement and the interests of St. Martin have not been 
adversely affected by any business relationship between the parties or their repre- 
sentatives. 

(e) On the evidence available it appears that the purchasers of Atholl, far from making too 
great a profit out of the transaction, will make no profit at all. 



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The St. Martin Merger 

65. Appendix A, to which reference has already been made, shows the relationship between the 
various companies in the St. Martin group at the time when receivers were appointed to St. 
Martin and Foster Clark early in 1963. 

66. The formation of the group covered a period of a little over four years, from 1956 to early 
in 1960, and the somewhat involved steps by which the principal companies in the group, namely 
St. Martin, Tickler, Atholl and Foster Clark, were brought together are illustrated in appendix I 
annexed. 

Situation at the beginning of 1956 

67. At the beginning of 1956 St. Martin, established as preserve manufacturers at Maidenhead 
in 1937, was a public company with a capital of £325,000 all in ordinary shares quoted on the 
Stock Exchange, London. The company had seven small subsidiaries. Following declining 
profits in the previous five years St. Martin made a loss in the year ended 31st March 1956. 
Dividends which had been paid at 12£ per cent per annum were reduced to 10 per cent in 1955, 
and no dividend was paid for the year ended 31st March 1956. 

68. Tickler, preserve manufacturers of Grimsby, Law, Whitchurch and Southall, was a private 
company incorporated in 191 1 and had a capital of £409,203 (of which £89,203 was in preference 
shares, and £320,000 in ordinary shares) closely held by the Tickler family and their associates. 
The company had six small subsidiaries. This company was also suffering from adverse con- 
ditions and had incurred a loss in each of the three years ended 30th April 1956. Early in 1956 
Tickler sold its factory in Southall, London, for £390,000 and thereby realised a capital profit 
in excess of £290,000. 

69. Atholl, the Scottish building contracting company, formed in 1944 and described earlier 
in this report, was a private company with a capital of £60,700 all in ordinary shares held pri- 
vately. The company had been making profits at the rate of about £50,000 per annum before 
1956. 

70. At that time, Foster Clark, canners of fruit and vegetables at Maidstone, was a public 
company with a capital of £625,000 quoted on the Stock Exchange, London. The company 
was making profits and paying dividends. It was not brought into the St. Martin group until 
1960. 

Events in 1956 

71. On 24th January 1956 Mr. Scott purchased the whole share capital of Atholl for a total 
cash consideration of £192,000. Following this transaction the directors of Atholl were replaced 
by Mr. Scott, Lord Sempill, Sir Alfred Beit and Mr. H. J. Guntrip. 

72. On 30th October 1956 Overseas American Finance Co. Limited, acting as nominees for 
Mr. Scott and Sir Alfred Beit, made a general offer to purchase all the preference and ordinary 
shares of Tickler for cash. This offer was contained in a circular which is reproduced in appen- 
dix J and, after the prices had been increased marginally, the offer was accepted by holders of 
about 99 per cent of both the ordinary and preference shares in Tickler. The total consideration 
amounted to £438,925. On 23rd November 1956 the existing directors of Tickler were replaced 
by Mr. Scott, Sir Alfred Beit and Mr. S. E. Bushell. 

73. In the short time between the purchase of Tickler in November 1956 and the end of that 
year, Tickler entered into two major transactions which changed its basis of operations. 

74. On 27th December 1956 Tickler entered into an agreement with St. Martin to sell to that 
company for seven years from that date all its future production at prices based on an agreed 
formula. The consideration included the allotment to Tickler of 675,000 new 4s. Ordinary 
shares representing 29 per cent of St. Martin’s increased equity. The agreement was authorised 
by minutes of the Tickler Directors dated 27th December 1956 and of the St. Martin Directors 
dated 2nd January 1957. 

75. At the same time Tickler bought from Mr. Scott the whole share capital of Atholl for 
£220,037. lOs.Od. payable in cash. This transaction was authorised by minute of the Tickler 
Directors dated 28th December 1956, Mr. Scott not voting. I have seen no evidence that the 
Tickler directors obtained an independent opinion on the price to be paid. 

76. The above transactions, which were all effected in 1956, may be summarised in chrono- 
logical order as follows : 

(i) The purchase by Mr. Scott of Atholl, building contractors; 

(ii) The sale by Tickler, preserve manufacturers, of one of its factories at a substantial 
capital profit ; 

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(iii) The purchase of Tickler by Mr. Scott and Sir Alfred Beit; 

(iv) The signing of a trading agreement between Tickler and St. Martin, affecting Tickler’s 
production for seven years, Tickler acquiring 29 per cent of St. Martin’s increased 
equity; 

(v) The purchase by Tickler of Atholl from Mr. Scott. 

77. At the end of 1956, as a result of these transactions Mr. Scott and Sir Alfred Beit between 
them owned 99 per cent of Tickler, which in turn owned 100 per cent of Atholl and 29 per cent 
of the equity of St. Martin. 

1957—1958 

78. In January 1957, following the trading agreement with Tickler, Mr. Scott, Lord Sempill, 
Sir Alfred Beit, Mr. S. E. Bushell and Mr. H. J. Guntrip were appointed directors of St. Martin. 
In the course of 1957 all the previous directors of St. Martin, with the exception of Colonel 
W. M. Tickler, resigned. 

79. In December 1957 Mr. Scott purchased from Tickler for cash at 4s. a share, equivalent 
to a total consideration of £135,000, the 675,000 ordinary shares in St. Martin which it had 
acquired under the trading agreement. This transaction was authorised by minute of the 
Tickler directors dated 23rd December 1957, Mr. Scott not voting. I have seen no evidence 
of an independent opinion concerning the purchase price but the Stock Exchange official list 
for that date records the market price of St. Martin’s Ordinary shares at 2s. 6d. — 3s. 6d. each, 
substantially less than the price paid by Mr. Scott. 

80. Early in 1958 Mr. Scott and Sir Alfred Beit sold their 99 per cent shareholding in Tickler 
to St. Martin for a combined consideration of £600,000 in cash and 1,500,000 new 4s. Ordinary 
shares of St. Martin. This transaction was authorised by minute of the St. Martin directors 
dated 6th February 1958, Mr. Scott not voting and Sir Alfred Beit not being present. A 
circular to shareholders of St. Martin dated 7th February 1958 giving information concerning 
this transaction is reproduced at appendix K. The new shares were issued on 6th February 
1958 and represented about 39 per cent of St. Martin’s increased equity. Taking the new 
St. Martin shares at their market price of 3s. 6d. at the end of February 1958 the total con- 
sideration received by Mr. Scott and Sir Alfred Beit for about 99 per cent of Tickler’s capital 
may be valued at £862,500 as compared with £438,925 at which the same shares changed 
hands in 1956. 

81. It will be seen from the consolidated balance sheet of Tickler and Atholl as at 31st December 

1957 (appendix K) that their cash resources were £636,899. Between then and 31st March 

1958 there were substantial movements on the current account between Tickler and St. Martin 
and on balance nearly £600,000 was transferred to St. Martin. The records of St. Martin and 
other information available to me indicate that one transfer of £600,000 in February 1958, 
from Tickler to St. Martin was used by the latter to provide the cash part of the consideration 
for the purchase of the Tickler shares from Mr. Scott and Sir Alfred Beit, referred to in the 
preceding paragraph. 

82. Bearing in mind the trading agreement between Tickler and St. Martin, and the common 
membership of three directors on their respective boards, I should have expected them to obtain 
an independent opinion concerning the fairness of the terms on which St. Martin acquired this 
substantial investment. I have seen no evidence of any such opinion and there is no reference 
to one in the circular sent to St. Martin shareholders. 

83. In February 1958 after Mr. Scott and Sir Alfred Beit had acquired a further 170,000 
ordinary shares in St. Martin, they held 62 per cent of the equity of St. Martin, which owned 
99 per cent of Tickler, which in turn owned 100 per cent of Atholl. 

1959—1960 

84. During 1959 the Directors of St. Martin looked for further acquisitions and in December 
of that year they made a formal offer to purchase the equity of Foster Clark by an exchange of 
shares. 

85. As mentioned above, Foster Clark, canners of fruit and vegetables at Maidstone, was a 
public company with a capital of £625,000 (of which £100,000 was in preference shares and 
£525,000 in ordinary stock units) quoted on the Stock Exchange, London. 

86. Foster Clark had continued to make profits up to September 1958, but in order to conserve 
cash resources it had not paid an ordinary dividend since that for the year ended 30th September 
1956. It was the parent company of a small group, of which the more important subsidiaries 
were Corbatch Canners Ltd. and Tay Valley Canning Co. Ltd. Immediately prior to the bid 
Foster Clark ordinary stock units of 10s. were standing in the market at 13s. 6d. per unit. 

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87. The terms of the offer were set out in a circular to Foster Clark shareholders dated 23rd 
December 1959 which is reproduced at Appendix L. Foster Clark had no previous connection 
with Mr. Scott and the directors resisted the bid. In January 1960, however, St. Martin 
succeeded in obtaining control and by the time the offer closed in February 1960 St. Martin 
had acquired 77 per cent of the equity of Foster Clark. 

88. Taking into account the new St. Martin shares at their mid-market price of 6s. 6d. per 
share at the end of March 1960 the total consideration received by the vendors of 77 per cent 
of the Foster Clark equity is calculated to have been £799,675 equivalent to 19s. 6d. per stock 
unit compared with the price before the bid of 13s. 6d. 

89. In March 1960 after the successful bid by St. Martin for Foster Clark involving the issue of 
further St. Martin shares, that company owned 77 per cent of the equity of Foster Clark, and 
99 per cent of Tickler, which owned 100 per cent of Atholl. The details are given in appendix A. 
This relationship continued until receivers were appointed to St. Martin and Foster Clark in 
February 1963. 



Scope of Investigation 

90. My investigation and report have been limited to consideration of the Atholl transaction 
and to the steps by which the principal companies in the St. Martin group were brought together. 
I have not investigated in detail the difficulties which led to the appointment of receivers and 
managers or the present financial position of the group. 



Evidence 

91. In the course of my enquiries I have received and examined audited accounts, financial 
statements, minutes, circular letters, correspondence and memoranda concerning the various 
matters which were the subject of my investigation. 

92. I have also received oral evidence from directors and others who seemed able to throw 
some light upon the matters under enquiry. Attached hereto marked appendix M is a list of 
the individuals who gave such evidence. I have not found it necessary to examine any person 
upon oath. 

John D. Russell 
Inspector 

31st January, 1966 



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St. Martin Preserving Company Limited 
Manufacturers of preserves, jams, marmalade {‘Chunky’ Brand), 
mincemeat and Christmas puddings 




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South Essex St. Martin St. Martin St. Martin St. Martin St. Martin Lauries Foster Clark 

Preserving (Eastern) (Northern) (Southern) (Eire) (Overseas) Preserves (South Australia) 

Co. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. Ltd. 



APPENDIX B 



S. R. HOGG. d.$.o„ m.c .. f.c.a., Receiver and Manager. 

St. Martin Preserving Company Limited 

r."n CT scott. cha.mman 2, BALFOUR PLACE, 

W. M. Y. Oswald 

H. J. GUNTRIK, A.C.I.S. (9*cr*ta*Y a 0,.,cto.) LONDON, W.l. 



2nd November, 1963. 

Dear Sir or Madam, 

Following the appointment of Mr. S. R. Hogg as Receiver and Manager to the 
St. Martin Preserving Co. Ltd., your Board was of the opinion that the fate of the 
unsecured creditors and shareholders was substantially dependent on the future of 
Atholl Houses Limited, a major subsidiary of St. Martins. 

Atholl Houses Limited is a principal building contractor located in Scotland, with a 
long and successful building history and reputation with many local authorities. 

At the date of the Receiver’s appointment the approximate value of Atholl’s contracts 
in hand was some £15m. The major proportion of these contracts in hand had been 
completed building wise, but final payments due to Atholl had not been received, 
very substantial sums of money being tied up in retentions and unmeasured work. 

The Receiver and the Bank of Scotland (Bankers and largest unsecured creditors of 
Atholl) arranged for a valuation to be made of Atholl. The Boards of Atholl and 
St. Martins considered this valuation, when produced, was grossly inadequate, 
resulting as it did in the assets of Atholl being undervalued in the opinion of the 
Boards by at least £715,000. 

Representations and protests by the Boards of Atholl and St. Martins concerning 
the inadequacy of the valuation were ignored or disregarded. The basis of the Boards’ 
objections however, has never been disputed by the Bank or the Receiver. 

Following their valuation the Bank and the Receiver maintained that a sale of Atholl 
was the only alternative to a disastrous liquidation of that Company. 

The Board of St. Martins has never agreed with this view and policy, of “no other 
alternative” most particularly if: 

(i) any sale of Atholl was to be based on the unrealistic valuation, 

(ii) the only alternative to a disastrous liquidation was to be a disastrous loss 
to St. Martins with a handsome profit to a purchaser (evident on even the 
valuation arranged by the Bank and the Receiver, let alone the Board’s 
estimate — see page 3, estimates A and B), 

(iii) the sale was to be effected with a customer of the Bank of Scotland in an 
atmosphere that precluded any discussion of the terms with the Boards of 
Atholl and St. Martins or pre-empted any proper examination of other 
alternatives. 

The Board of St. Martins, in its efforts to secure and inform creditors, and share- 
holders, has repeatedly but unsuccessfully tried to obtain full information concerning 
negotiations or agreements relative to a sale of Atholl Houses Limited. 

A committee of shareholders comprising the largest individual holdings in St. Martins 
supported the Board’s views that every effort should be made to retain the benefit of 
Atholl within the St. Martins Group. This committee of shareholders made an offer 
to the Receiver to purchase his interests in Atholl. 

The Receiver rejected the shareholders’ offer as being unacceptable to him, but gave 
no reasons why the offer was unacceptable. From the information available, it appears 
that the Receiver has accepted a lesser offer for St. Martins’ interests in Atholl 
Houses Limited. 

Such information as is available indicates to your Board the following: 

1. The Receiver has now concluded an agreement, the terms of which provided 
for virtually the whole of the issued capital of Atholl to be sold for the 
sum of £1. 

2. Net current account advances of some £660,000 loaned to Atholl by the 
St. Martins Group (prior to the appointment of the Receiver) will not now 
be repaid to St. Martins, nor be recovered by St. Martins at any future date. 

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3. A further term of the agreement concluded by the Receiver provides for 
St. Martins to continue to shoulder the burden of a £500,000 guarantee 
(formerly £900,000) to the Bank of Scotland. This £500,000 guarantee being 
on account of continuing advances from the Bank of Scotland to Atholl 
amounting to £600,000. 

It appears that St. Martins must continue to guarantee £500,000 of Atholl’s debt of 
£600,000 to the Bank of Scotland, even though St. Martins no longer has any control 
or vested interest in the affairs or assets of Atholl. This continuing guarantee of 
£500,000 to the Bank of Scotland despite the fact that: 

(a) The Receiver has sold virtually the whole of the issued capital of Atholl 
for £1. 

(b) The transaction concluded negates any possibility of the St. Martins Group 
ever recovering its net loans to Atholl of £660,000. 

On the basis of the valuation arranged by the Bank and the Receiver ( page 3, estimate A), 
it would seem that the purchasers of Atholl ( having acquired the shares from the Receiver 
for the sum of £1) will be in a position to make a profit of at least £622,920, although , 
in the opinion of your directors, the profit to the purchaser is more likely to be in the 
region o/£l,337,920. 

I must advise shareholders that, in my opinion,, there are many events and occurrences 
concerned with the sale of Atholl tfyat remain inexplicable, and further, I do not 
believe the Receiver or the Bank of Scotland have been as frank and, open with the 
Board of St. Martins as they might have been. Such information as has been provided 
of the terms between the Bank of Scotland and the purchaser of Atholl shares has 
been consistently blurred or expressed in ambiguous language. 



Without full disclosure of all documents and agreements, the Board of St. Martins 
cannot be satisfied that the terms of sale for Atholl (so far disclosed) was, or is, in 
the best interests of the unsecured creditors and shareholders of the St. Martins 
Group of Companies. 

As Chairman of St. Martins therefore I have asked the Receiver to supply copies of 
all documents and agreements relating directly or indirectly to the sale of the shares 
of Atholl Houses Limited and to the arrangements with the Bank of Scotland. 

Solicitors acting for the Receiver replied in the following terms: 

“It is not the Receiver’s intention or indeed his duty to disclose the documents 
relating to this or any other transaction into which he may enter in the name 
of the Company until such time as he reports on his dealings to the creditors 
and other interested parties.” 

Presumably, the Receiver can justify his actions and I therefore, do not understand 
why he will not assist the Board of St. Martins to fulfil its duties to the unsecured 
creditors and shareholders of the St. Martins Group of Companies. 



To assist the Board, all that the Receiver has to do is to supply copies of documents 
and agreements concerned with the sale of Atholl Houses Limited. 

Atholl Houses was a major subsidiary of St. Martins and the sale of this major asset 
for the consideration which I understand was received may well result in very 
substantial losses to the shareholders and creditors of St. Martins. 

Questions I consider vital to the interests of unsecured creditors and shareholders 
have been subjected to considerable evasion or prevarication, and have not been 
properly answered. 

In the circumstances, therefore, the Board of St. Martins is convening a meeting of 
shareholders (Notice attached herewith). At this meeting the Board will propose a 
Special Resolution for shareholders consideration declaring that there ought to be an 
Inspector appointed by the Board of Trade to investigate the sale of Atholl Houses 
Limited. 

Shareholders unable to attend the meeting are invited to indicate their support, or 
otherwise, for the Board’s resolution by returning the proxy form enclosed. 



R. N. SCOTT, 

Chairman. 



930H4—D 



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ESTIMATED ASSETS AND LIABILITIES OF ATHOLL HOUSES LIMITED 
AS TAKEN OVER BY THE PURCHASER OF ATHOLL SHARES FOR THE 
SUM OF £1 



ESTIMATE A 

Assets 






ESTIMATE B 
Assets as estimated by 


(as estimated in valuation arranged 
by Bank and Receiver) 

Fixed Assets 






& St. Martin 


137,785 




137,785 


Plant and Tools 


40,906 




40,906 


Interest in Subsidiaries 


27,513 




27,513 


Current Assets 

Stock in Trade 


25,774 




25,774 


Retentions and Interim Payments . . 


699,365 




699,365 


Estimated Work in Progress 


442,500 




1,157,500 


Debtors and Loans 


114,206 




114,206 


Cash in Hand 


3,651 




3,651 


TOTAL ASSETS . . . . 1,491,700 


1,491,700 


2,206,700 2,206,700 


LESS: 








Liabilities 








Trade and Other Creditors 


236,003 




236,003 


Inland Revenue and Pensions 


32,776 




32,776 


Deferred liability to Bank of Scotland 
(See note i) . * 


600,000 




600,000 




868,779 


868,779 


868,779 868,779 


NET ASSETS 




622,921 


1,337,921 


COST OF SHARES TO 








PURCHASER 




1 


1 


PROFIT TO PURCHASER . . 




622,920 


1,337,920 


Less undisclosed sharing arrange- 
ment between purchaser and Bank 
of Scotland (See note ii) . . 




? 


? 











(i) £500,000 of this deferred amount due to the Bank of Scotland continues to be 
guaranteed by St. Martins. 

(ii) There is some sharing arrangement between the Bank of Scotland and the 
purchaser of Atholl. This sharing arrangement is concerned with any surplus 
assets. The precise details of this sharing arrangement have not been disclosed 
despite repeated requests for information. 

3 

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APPENDIX C 



Correspondents in U-S'A • Canada • Bermuda • Australia • New Zealand • South & hast Africa 



HOGG, BULLIMORE & C<? 

CHARTERED ACCOUNTANTS. 



Telegrams : veristock .London . Cables: veristock. London. e c a 
Telephone: METROPOLITAN 8395 




H.D. Barnard. 

O. G.W.Ballarc 
W. D. Wilson. 

P. M. Robeson . 
D. C. Clark. 



PRIVATE & CONFIDENTIAL . 



To : The Creditors of 

Atholl Houses Ltd. 



Dear Sirs , 













JS.C.2. 29th April 1963. 



T. tv 


SL. A mt, j 


Reo*ivwJ 


1 -MAY 1963 


Aniwirwi 


1 



Atholl Houses Ltd. 



\\\*M Further to my circular letters of the 26th February and 
the,j28th March 1963, and to the circular letter dated the 8th March 
from the Committee of Creditors, I am now writing to advise you 
that the Reports of Messrs. John Dansken & Purdie, Chartered 
Quantity Surveyors, dated 10th April 1963, on the Company's Work 
in Progress, and of Messrs. Thomson McLintock & Co., Chartered 
Accountants, dated 16th April 1963, on the state of the Company's 
Affairs, have both been delivered to the Bank of Scotland and 
copies have been made available by the Bank to me and to all the 
other Directors. It is obviously not possible to supply creditors 
with full copies of these two Reports but I am quite certain that 
any interested creditor who applies to the Bank of Scotland will 
be allowed to peruse the full documents. 



I think, however, the contents of the Reports can be 
summarised as follows :- 



(1) WORK IN PROGRESS . 

Messrs. 'John Dansken & Purdie report that the gross 
value of work in progress of Atholl at the 28th February 1963, 
arrived at by taking the valuations for interim payments before 
and after this date and adjusting same, the retention monies taken 
from the interim valuation immediately prior to the 28th February 
1963, and the amounts outstanding to sub-contractors arrived at by 
taking the total value of work done by sub-contractors, can be 
summarised as follows :- 



Gross 
Cash Due 



Retention 

Money 

Held 



Cash 

Immediately 

Available 



Sub-Contractors £ 207 ,744- 

Atholl Houses Ltd. 491 ,621 

Total £ 699,365 



£ 134,953 £ 72,791 

371,576 120,045 

£ 506,529 £ 192,836 



They point out, however, that these values are likely 
to be conservative assessments in respect of there being no 
valuation placed on unmeasured work and they give as their opinion 
that these values may be understated to the extent of an average 
maximum of about 4%, i.e. by a sum of £4^2,500, which of course 
includes unmeasured work due to sub-contractors. 

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2 



(2). STATEMENT OP AFFAIRS . 

We append to this report a summarised Statement of the 
Company's affairs, both on a going concern basis and on a break up 
value based on the figures submitted by Messrs. Thomson, McLintock 
& Co. 



You will observe that the Work in Progress has been 
included at the value suggested by Messrs. John Dansken & Purdie 
which exclude o any value of unmeasured work, but even were the 
unmeasured work to be included on the basis suggested by them the 
Statement of Affairs would still result in a deficiency on a going 
concern basis of well over £1,000,000. 

Immediately on receipt of these Reports the Bank of 
Scotland got into touch with Mr. Hugh C. Stenhouse, O.B.E. , who 
had some time earlier expressed his concern that yet another well 
known Scottish Company might be put into liquidation with all its 
unfortunate consequences for creditors and others dependent on 
Atholl . 



Ac a result of these discussions Mr. Stenhouse made 
certain proposals, which were accepted by the Bank of Scotland 
and by myself ac Receiver of St. Martin Preserving Co. Ltd., 
but as stated below this offer has now been withdrawn. 

The offer can be summarised as follows: - 



1. The whole issued share capital of Atholl to be acquired for 
the nominal consideration of £1. 

2. The loan of approximately £750,000 from St. Martin Preserving 
Co. Ltd. to Atholl to be cancelled in return for a 
consideration of £69 , 000 - which payment to be made by the 
Bank of Scotland. 



The loan from Atholl to T.G. Tickler Ltd. amounting to 
£81,110 to be settled in full by the payment by 31st May 
1963 .by Ticklers of £69,000. 



4- The Bank of Scotland to cancel -one-half of its total advance 
to Atholl amounting, after the application of accrued interest 
and having, met the obligations undertaken by the Bank during 
the moratorium period, to approximately £1,300,000. The 
Bank to be given a first Floating Charge over the whole assets 
of. the Company and fixed security over its heritable property 
in respect of the' continuing advance of approximately 
£.650,000. Interest on that advance to be waived for a period 
of ' one ye ar . 



5. The purchaser to make arrangements immediately to purchase 
from all other creditors of Atholl their whole admitted 
claims against Atholl as at 28th February 1963 for a payment 

5/- per £. It was also a term that the purchaser after a 
reasonable period and at his own discretion would make a 
further payment to trade creditors not exceeding 5/- pen £ 
if it transpired' that’ the position of the Company was more 
favourable than now appears. 

6. Mr.. Oswald and Mr.' Lambie to remain in the employment of the 
Company for not less than one year although the purchaser 
would be entitled to terminate their employment at any time 
on three months' notice. 



7. That of the present Directors of the Company who are MessrB. 
Hogg, Durlac , Wilson, Scott, Seaman, Oswald and Lambie,. 

Messrs. Scott and Seaman should immediately • resign from the 
Board. Mr. Seaman should also immediately resign as Secretary. 

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- 3 - 



8* Future Bank overdraft facilities, if required, to be made' 
available by the Bank of Scotland on a new account and on 
the basis of security being provided satisfactory to the 
Bank. 

9. The existing guarantee given by St. Martin to the Bank of 
Scotland for sums up to £900,000 to remain undisturbed, 
except that the Bank of Scotland could only, rank in respect 
of the continuing guarantee for the uncancelled balance of 
its advance amounting, to- approximately £650., 000. 

Mr. Stenhouse made it clear at the outset that in order 
to restore full confidence in the Company, an imperative first 
step before he could proceed further was the immediate 
reorganisation of the Board. The proposals which Mr. Stenhouse 
had made to the Bank were at once communicated to all Directors 
of Atholl. 



Immediate action was necessary to accomplish 
reorganisation of the Board and accordingly I and my Partners, 
Durlac and Wilson, delivered to Mr. Stenhouse our undated letters 
of resignation as Directors of the Company so that Mr. Stenhouse 
would be in a position to lodge our resignations with the Company 
at any time he desired, Neither Mr. Seaman's nor Mr. Scott's 
resignation has yet been received and accordingly Mr. Stenhouse 
cannot proceed further. Therefore, the proposals have been 
withdrawn. 



It is with the greatest regret that I have to advise 
creditors that in the absence of .any immediate alternative proposal 
I can see no other course but for the creditors to take steps to 
put the Company into liquidation as quickly as possible so as to 
prevent any creditor acquiring a preference. My Partners Durlac 
and Wilson and I are today tendering, to the Company our 
resignation as Directors, but we will nevertheless continue to 
fulfil our undertaking given to the Bank of Scotland to counter- 
sign cheques drawn by Atholl on the special account of the Bank 
of Scotland opened by the Bank to meet moratorium payments due to 
creditors in respect of orders authorised during the moratorium 
period which ends tomorrow, Tuesday, 30th April. We -will moreover 
be pleased tp help the creditors in any way we can and, if 
required, to attend a meeting of creditors if ohe be convened. 



Yours faithfully, 



S. R. HOGG. 



'SRH/WHD/GJ . 



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ATHOLL HOUSES LTD. 



SUMMARISED STATEMENT OF AFFAIRS 
as At £8 tH February 1963 







As 


Estimated 






going 


Break up 






concern 


Values 




Aggregate 






FIXED ASSETS Cost 


Depreciation 


Net 




heritable Property £ $7 ,391 


6,021 


51,370 




Plant and Machinery 102,261 


35,837 


66,424 




Motor Vehicles 45,280 


17,321 


27,959 




Office Furniture and 








Equipment 10 , 082 


5.189 


9-, 893 




215,014 


64,368 


150,646 




Less: Instalments outstanding 








under Hire Purchase Agreements 


12,861 








137,785 


80,000 


Loose Plant & Tools 




40,906 


5,000 


INTEREST IN SUBSIDIARY 








Shares at cost 




27,513 




CURRENT ASSETS 








Stock in Trade - as valued by Company's 






officials 




25,779 


10,000 


Work in Progress - as valued by John Dansken 






& Purdie 




699,365 


100,000 


Sundry Debtors and Unexpired Charges 


14,877 


14,000 


Loan to Director 




18,219 


18,000 


Loan to T.G. Tickler Ltd. 




81,110 


69,000 


Cash on Hand 




3:651 


3.j65i 


TOTAL ASSETS 


1 , 


,049,200 


299,651 


LESS: 








PREFERABLE CLAIMS 








* Bank of Scotland for wages, etc. 


317,997 






Inland Revenue 


25,468 






Graduated Pension Contributions 








& Pension Fund 


7,308 








£3507773 




350,773 


DEFICIENCY ON PREFERABLE CLAIMS 






51,122 


UNSECURED CREDITORS 








* Bank of Scotland 


851,128 






Inland Revenue 


8,396 






Amount due to Sub-contractors 








as assessed by John Dansken 








& Purdie 


207,744 






Trade and Sundry Creditors 


387,103 






St. Martin Preserving Co. Ltd. 


744,807 






Foster Clark Ltd. 


2,025 






Robroyston Brickworks Ltd. 


14,743 






£2,215,946 




2,215,946 




2, 


566,719 




Estimated Additional Claims arising 


in event 






of liquidation for cost of completion. of 






contracts by local authorities, etc. less 






sums due on contracts but withheld by them 




436,474 


DEFICIENCY OF ASSETS 


£1, 


517.519 




TOTAL ESTIMATED DEFICIENCY AS REGARDS CREDITORS 


£2,703,542 



Subject to expenses of realisation and distribution. 



* Note : Bank of Scotland hold the guarantee of St. Martin 
Preserving Co. Ltd. for £900,000. 

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APPENDIX D 



McGRIGOR DONALD & CO. 
Solicitors 



172 St. Vincent Street, 
GLASGOW , C.2. 

7th June, 1963* 



Creditors of Atholl Houses Ltd. 



Dear Sirs, 

You will have received from the Board of Atholl Houses Ltd., a 
circular dated 21st May 1963 which cancelled the meeting of creditors 
called by the Board for 23rd May 1963* 

On 24th May 1963, as the result of a Petition for Compulsory 
Winding Up presented by the Inland Revenue with the approval of the 
Committee of Creditors and the Bank of Scotland, Mr. John Waldie, C.A., 
of Messrs. Thomson McLintock fit- Co., Chartered Accountants, 21b West 
George Street, Glasgow, was appointed provisional liquidator and i6 now 
in de facto control o'f the Company's affairs. 

In accordance with the usual procedure an order was made for 
service of the Petition for Liquidation upon the Company and in course 
of time the Court will fall to determine whether or not the Company 
should be liquidated and an official liquidator appointed.. If an 
official liquidator is appointed the. date of liquidation will for all 
purposes, including equalisation of diligences, date back to 24th May 

1963. 

In order to preserve the position, Mr. Waldie is in touch with 
the various employers and it is hoped to arrange a general resumption 
of work on the contracts on an interim basis until final arrangements 
can be effected. This matter is, of course, one for Mr. Waldie and 
not for the Committee of Creditors whom we represent and you should be 
hearing directly from bim if you are concerned either as suppliers or as 
sub -contractors in contracts not yet completed. 

In the meantime, however, the Committee of Creditors have been 
consulted by interested parties in connection with certain proposals 
made by Messrs. A. A. Stuart & Sons (Contractors) Ltd. with the approval 
and support of their major shareholder, Messrs. Sagit Trust Co. Ltd. 
(formerly The South African and General Investment and Trust Co. Ltd.) 
who are a substantial industrial holding company. 

These proposals which have been examined in detail by ourselves 
as Solicitors to the Committee of Creditors bear' some similarity to the 
proposals originally made by Mr. Stenhouse which were set out in full in 
Mr. Hogg's circular of 29th April 1963. They involve arrangements for 
acquiring through the Receiver of that Company the debt of Messrs. St. 
Martins Preserving Company Ltd. and an agreement with the Bank of Scotland 
by which the Bank will substantially reduce its claim and receive payment 
in whole or in part of the remainder only after the existing contracts of 
the Company have been completed. It would be part of the barga in tha^ 
the debts of trade creditors (includi ng sub -contract o rs ) as at 28t h 
February 1963 be settled by payment at the rate of 5/- in ~the £ on these_ 
debts as ascertained. 



If / 



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2 . 



If you have examined the f inures set out in the various circular 
letters you will he satisfied, as are the Committee of Creditors, that in 
the event of the liquidation taking its normal course, the possibility of 
a dividend' to ordinary' creditors is exbremely remote. In addition the 
liquidator would he faced with very great problems in the matter of 
attempting to finance the completion of contracts and this might well mean 
that many contracts would require to he abandoned and put out by the local 
authorities for fresh tender to new main contractors. Having these points 
in mind the Committee of Creditors have no hesitation in indicating that 
they themselves, in respect of their own debts, propose to accept the figure 
of 5/- in the £ mentioned above and strongly recommend all trade creditors 
to do likewise. In making this recommendation the Committee of Creditors 
would like to acknowledge that in their opinion the terms of the proposed 
arrangement are eminently fair as between the bank and the other creditors. 
Indeed the bank has throughout the discussions shown itself willing to 
accept the possibility that It will receive less than it would receive, by 
virtue of its preference, on a liquidation, if by doing so it would assist 
proposals for carrying on the contracts and enabling something to be paid 
to the trade creditors. In this respect the Committee regard the bank's 
attitude to the proposed negotiations as a generous one. 

The Committee of Creditors would like to make it clear that the 
proposal does not deal with indebtedness after 28th February 1963 because 
as a result of the moratorium arrangements, sums due to suppliers and sub- 
contractors, for the period from 1st March to 30th April 1963, will be paid 



Arrangements with suppliers and sub -contractors made by Mr. Waldie 
subsequent to his appointment will also be settled in full and will be 
unaffected by the present .proposals. 

It will be clear therefore that the offer of 3/- in the £ is in 
relatio n to the claims of creditors both sub-contractors and suppliers 
which were irozen 1 at the commencement of the moratorium . 



The proposed arrangements with Messrs. A .A. Stuart & Sons .(Contractors) 
Ltd. and their Associated Company, Messrs. Sagit Trust Co. Ltd. are 
exceedingly complicated involving as they do separate agreements with 
certain otlier interested parties but the willingness of creditors to accept 
settlement of their claims to 28th February 1963 at a rate of 5 /- in the £, 
is an essential element of the bargain and we have agreed, as a Committee/ 
to seek the consent of creditors to this part of the arrangement on the 
basis that if it cannot be obtained there is little point in incurring the 
expense, of bringing to a conclusion other negotiations, including negotiations 
wioh employers on the various contracts. Time is naturally very short for it 
xs imperative that work be resumed on all the contracts at the earliest 
possible moment and to make up for time lost for one reason or another in 
recent months. . in the circumstances the Committee have agreed to notify 
lSwune 1 196^ iSS ° f the ViewS of creditors as a whole at 2 p.m. on Friday, 



£re agreeab le to the proposal then however larg e or small 
XQur_clain may be we ask you to sign the attached form "and send it t.n" +.V-* s 
address by return of post if possible . — 



does 
the / 



We should make it clear that the signing and returning of the 
not conclude a contract for purchase of your debt as ascertained 



form 



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3. 



the lines mentioned above for such a bargain will ultimately require to be 
effected directly between the proposed purchasers and yourselves. Signing 
and returning the form will, however, amount to an intimation that you are 
prepared to complete such a contract at the appropriate time. 



Yours faithfully, 

McGRIGOR DONALD & CO. 

Solicitors to the Committee of Creditors. 



June, 1963. 

Messrs. McGrigor Donald & Co., 

Solicitors, 

172. St. Vincent Street, 

GLASGOW, C.2. 

Agents for the Committee of Creditors . 

Dear Sirs, 

Atholl Houses Ltd . 

I/Ws 0 f 

intimate that as part of such 

an arrangement as is set out in your circular letter of 7th June 1963, 
i/We am/are prepared to sell, assign or discharge for a payment at the 
rate of 5/- in the £ the indebtedness of Messrs. Atholl Houses Ltd, to 
me/us as at 28th February 1963-. 

Yours faithfully. 



N.B. No figure for the indebtedness should be inserted in this 
i ntimation as this would involve checking all figures through 
the books of the Company i 



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APPENDIX E 



THIS AGREEMENT is made the Bo ' 

T" O- 

day of July 1963 BETWEEN ^ TICKLER jf LIMITED the 
registered office of which is at Paster" Street, Grimsby in 
the County of Lincoln (hereinafter called "Ticklers") of 
the first part ST . MARTIN PRESERVING COMPANY LIMITED the 
registered office of which is at Eiffel Tower Works, Hart 
Street, Ikidstone, Kent acting by its agent SAMUEL 
ROLLESTON HOGG Chartered Accountant of City-Gate House, 
London, E.C.2. in his capacity of Receiver for the 
Debenture Holders of the said St, Martin Preserving Company 
Limited (hereinafter called "St. Martin Preserving") of the 
second part the said SAMDEL ROLLESTON HOGG (hereinafter 
called "the Receiver") of the third part and A .A. STHART Sc 
SONS (CONTRACTORS) LIMITED the registered office of which is 
at 2,275 London Road, Glasgow, E.2. (hereinafter called 
"Stuarts") of the fourth part 
WHEREAS s- 

(a) At ho 11 Houses Limited (hereinafter called "Atholl 
Houses") was incorporated in Scotland in 1944 and has an 
issued share capital of £60,700 divided into 60,700 fully 
paid shares of £1 each 

(b) Ticklers are the beneficial owners of the whole of the 
said fully paid 60,700 shares of £1 each in Atholl Houses, 
of which 60,698 are registered in the name of Tioklers, one 
share is registered in the name of Wreyford Henri Durlao as 
a mere nominee of Ticklers and one share is registered in 
the name of Richard Nelson Scott as a mere nominee of 
Ticklers 

(c) Ticklers is a subsidiary of St, Martin Preserving 

1 . 

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which company is the beneficial owner of 318,557 of the 
issued 320,000 Ordinary Shares of £1 each in the capital of 
Ticklers, all the 40,000 issued 5&- per cent. Cumulative 
Preference Shares of £1 each and 49,103 of the issued 
49,203 n per cent. Cumulative Preference Shares of £1 each 

(d) By a First Mortgage Debenture (hereinafter called 
"the Debenture") dated the 30th January, 1939, St. Martins 
Preserving charged its property and assets therein specified 
to secure the payments to Martins Bank limited of the 
monies therein mentioned 

(e) By, a Transfer of Debenture dated the 21st July, 1961, 
Martino Bank limited transferred the Debenture and all 
monies and Interest thereby secured and the full benefit 
thereof to National Commercial Bank of Scotland limited 

(f) By a Deed of Appointment dated the 6th February, 1963, 
National Commercial Bank of Scotland limited, pursuant to the 
power in that behalf contained in the Debenture, appointed 
the Keoeiver to be receiver and manager of the property 
oharged by the Debenture and to exercise the powers therein 
contained 

(g) By Interlocutor of the Court of Session, Edinburgh 
dated the 24th May, 1963, John Waldle, Chartered Accountant 
of Glasgow (hereinafter oalled "the Provisional liquidator") 
was appointed provisional liquidator of Atholl Houses 

(h) Ticklers is indebted to Atholl Houses in the sum of 
£81,000 or thereabouts 

(i) Atholl Houses is indebted to St. Martin Preserving 
in the sum of £750,000 or thereabouts 

NOW IT IS HEREBI AGREED as follows »- 
(A) THIS Agreement is conditional upon i- 

(a) Stuarts acquiring on or before ' £ x July, 1963 
("the Settlement Date") the agreement of all, 
or of as many as Stuarts in its sole discretion 

2 . 

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deems sufficient, trade creditors (including 
the Inland Revenue (so far as unsecured) Poster 
Clark limited and Robroyston Brickworks 
limited) to accept 5/- in the £ in full 
settlement of their claims against Atholl Houses 
as at 28th February, 1963 

(b) Ticklers paying to Atholl Houses the sum of 
£81,000 and obtaining from Atholl Houses :- 

I. a release from all liability whatsoever to 
Atholl Houses in respect of - 

(i) all sums now owing by Ticklers to 
Atholl Houses and whether presently 
payable or notj 

(ii) all claims, actions, proceedings, 
accounts • and demands whatsoever which 
Atholl Houses has at any time hereto- 
fore had or now has or may have here- 
after against Ticklers for or on 
account of or in relation to any act, 
cause, matter or thing prior to the 
Settlement Date; 

and II. an acknowledgment that the payment by 

Ticklers of the said sum of £81,000 shall 
not operate in any way by way of limitation 
of the complete and absolute release 
intended to be effected by sub— heads (i) and 
(ii) of this sub-clause 

(c) Atholl Houses paying to the Receiver the sum of 
£81,000 and obtaining from the Receiver and St. 
Martin Preserving :— 

I. a release from all liability whatsoever to 
St . Martin Preserving in respect of - 
(i) all sums whatsoever owing by Atholl 

3. 

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Houses to St. Martin Preserving 
whether presently payable or not; 

(ii) all claims, actions, proceedings, 

accounts and demands whatsoever which 
St. Martin Preserving has at any time 
heretofore had or now has or may have 
hereafter against Atholl Houses for 
or on account of or in relation to 
any act, cause, matter or thing prior 
to the Settlement Date; 

and II. an acknowledgment that the payment of the 

said sum of £81,000 shall not operate in any 
way by way of limitation of the complete and 
absolute release intended to be effected by 
sub-heads (i) and (ii) of this sub-clause 

(d) The Commissioners of Inland Revenue withdrawing 
their petition for the winding up of Atholl Houses 
and the discharge of the Provisional liquidator 
from his present appointment by the Court of 
Session, Edinburgh, as provisional liquidator of 
Atholl Houses 

(e) The Receiver and St. Martin Preserving obtaining 
from Bank of Scotland a reduction from the sum of 
£900,000 to the sum of £500,000 of the amount of 
the liability of St . Martin Preserving to such 
Bank in respect of St . Martin Preserving’s 
guarantee of such Bank's advance to Atholl Houses 

(B) (i) Ticklers undertakes and covenants with Stuarts 

that (subject to the conditions contained in sub-paragraphs 
1 (A)(a) and 1 (A)(d) above being duly implemented) it will 
duly pay to Atholl Houses on demand the said sum of £81,000 
in exchange for delivery of a duly executed Deed of Release 
in the terms set forth in the Pirst Schedule hereto; 

4 . 

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(ii) The Receiver and St. Martin Preserving undertake 
and covenant with Stuarts that (subject to the conditions 
contained in sub-paragraphs 1 (A)(a) and 1 (A)(d) above 
being duly implemented) i 

(a) they will use their respective best endeavours 
to procure that Atholl Houses will forthwith 
upon receipt of the said sum of £81,000 

(1) duly execute and deliver to Ticklers a 
Deed of Release in the terms aforesaid; and 

(2) pay the said sum of £81,000 to the Receiver 
and (b) upon receipt of the said sum by the Receiver they 

will duly execute and deliver to Atholl Houses 
a Deed of Release in the terms set forth in the 
Second Schedule hereto 

2. SUBJECT to and upon the due fulfilment of all the 
conditions referred to in Clause 1 hereof s— 

(a) Ticklers shall sell and Stuarts shall purchase all 
the said 60,700 issued and fully paid shares of £1 
each in Atholl Houses at the total price of £1 

(b) The said shares hereby agreed to be sold shall be 
sold free from any lien, charge or encumbrance and 
with all rights attached thereto 

3 . THE sale and purchase hereby agreed to be made shall 
be completed forthwith upon the due fulfilment of all the 
conditions referred to in Clause 1 hereof. On completion 

(i) Ticklers shall deliver a duly executed transfer in 
favour of Stuarts or its nominees of the said 
60,698 shares of £L each in Atholl Houses registered 
in its name together with the relevant share 
certificate(s) ; 

(ii) Ticklers shall procure the said Wreyford Henri XUrlac 
to deliver to Stuarts a duly executed transfer in 
favour of Stuarts or its nominees of the said one 

5. 

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share registered in nis name and held by him as a 
mere nominee of Ticklers; 

(iii) Ticklers shall use their best endeavours to procure 
the said Richard Nelson Scott to deliver to Stuarts 
a duly executed transfer in favour of Stuarts or its 
nominees of the said one share registered in his 
name and held by him as a mere nominee of Ticklers 
together with the relevant share certificates 

4* TICKLERS hereby agree that until the said transfers 

referred to in Clause 3 hereof have been duly registered by 
At ho 11 Houses Ticklers will (at the expense of Stuarts) 
exercise such rights and powers in respect of and attaching 
to the said shares as Stuarts shall from time to time 
direct. In particular, but without prejudice to the 
generality of the foregoing, it is contemplated that such 
rights and powers be exercised for the purpose of 
requisitioning a General. Meeting of Atholl Houses pursuant 
to Section 132 of the Companies Act, 1948 to reconstitute 
its Board of Directors and for the purpose of voting at 
General Meetings of Atholl Houses in such manner as Stuarts 
may direct 

5. TICKLERS hereby warrants to and covenants with Stuarts 
that to the best of its knowledge and belief the recitals to 
this Agreement are in all respects accurate having regard 
to the register of members of Atholl Houses not being 
available for inspection 

6. ST. MARTIN PRESERVING and the Receiver hereby 
guarantee to Stuarts the due performance by Ticklers of all 
its obligations hereunder 

7. NOTWITHSTANDING the completion of this Agreement the 
provisions thereof shall remain in full force and effect and 
binding upon the parties hereto to the extent that they are 
not fully implemented on or before completion 

AS WITNESS the hands of the parties hereto the day 

6 . 

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and year first above written 



THE FIRST SCHEDULE 

THIS DEED is made the 

— day of July, 1963 

BETWEEN ATHOIil HOUSES LIMITED whoae registered office 

is at 29, Dark Circus, Glasgow, C.3. (hereinafter called 

*T" C«r 

"Atholl Houses") of the one part and^TICKLER^ LIMITED whose 
registered office is at Past ear Street, Grimsby, Lincoln 
(hereinafter called "Ticklers") of the other part 

NOW THIS DEED WITNESSETH as follows i- 
1« IN consideration of the sum of £81,000 paid by 

Ticklers to Atholl Houses (the receipt whereof is hereby 
acknowledged) Atholl Houses hereby releases Ticklers from all 
liability whatsoever in respect of 

(i) all sums now owing by Ticklers to Atholl Houses 
and whether presently payable or not; 

(ii) all claims, actions, proceedings, accounts and 
demands whatsoever which Atholl Houses have at 
any time heretofore had or now have or may have 
hereafter against Ticklers for or on account of or 
in relation to any act, cause, matter or thing prior 
to the date of this Deed 

2. THE figure of £81,000 stated in Clause 1 hereof shall 

not operate in any way by way of limitation of the complete 
and absolute release intended to be effected by such Clause 

IN WITNESS whereof the parties hereto have caused their 
Common Seals to be hereunto affixed the day and year first 
above written 

THE SECOND SCHEDULE 

THIS DEED is made the 

; ■■■■ — day of July, 1963 

BETWEEN ST. MARTIN PRESERVING COMPANY LIMITED whose 

7. 

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registered office is at Eiffel Tower Works, Hart Street, 
Maidstone, Kent, acting by its Agent SAMUEL ROLLESTON 
HOGS, Chartered Accountant, of City— Gate House, London, 
E.C.2. in his capacity as Receiver for the Debenture 
Holders of St. Martin Preserving Company Limited 
(hereinafter called "3t. Martin Preserving 11 ) of the first 
part the said SAMUEL ROLLESTON HOGG (hereinafter called 
"the Receiver") of the second part and ATHOLL HOUSES 
LIMITED whose registered office is at 29, Park Circus, 
Glasgow, C.3. (hereinafter called "Atholl Houses") of the 
third part 

HOW THIS DEED WITHESSETH as 

follows 

1. IH consideration of the sum of £81,000 paid by 
Atholl Houses to the Receiver (the receipt whereof the 
Receiver hereby acknowledges) St. Martin Preserving and 
the Receiver hereby release Atholl Houses from all 
liability whatsoever to St. Martin Preserving in respeot 
of i- 

(i) all sums whatsoever owing by Atholl Houses to 

St. Jfertin Preserving and whether presently payable 
or notj 

(li) all claims, aotions, proceedings, accounts and 
demands whatsoever which St. Martin Preserving 
has at any time heretofore had or now has or may 
have hereafter for or on account of or in relation 
to any act, cause, matter or thing prior to the date 
of this Deed 

2. THE figure of £81,000 stated in Clause 1 hereof 
shall not operate in any way by way of limitation of the 
complete and absolute release intended to be effected by 
such Clause 

IH WIIHESS whereof the parties of the first and 

8 . 

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third parts hereto have caused their Common Seals to he 
hereunto affixed and the party of the second part has set 
his hand and seal the day and year first above written 



SIGHED hyvauiSM dexek vaisd 

. T- <v. 

on behalf of^IICKLER|l ) 
LIMITED in the presence ) 
of:- ) 

N.A. Copping 



City Gate House, 
Finsbury Square, 
London, E.C.2. 



W.L. Wilson 
6d. Stamp. 



Managing Clerk. 



SIGNED by SAMUEL ROLLESTON ) 

,HOGG. ) 

on behalf of ST, MARTIN ) s.H. Hogg. 

PRESERVING COMPANY ) 

LIMITED in the presence ) 
of:- ) 

N.A. Copping 



City-Gate House, 
Finsbury Square, 
London, E.C.2* 



Managing Clerk. 

SIGNED by SAMUEL ) 

HOLIEST ON HOGG in the ) S.R. Hogg, 

presence of:- ) 

N.A. Copping 

City-Gate House, 

Finsbury Square, 

London, E.C.2. Managing Clerk. 



SIGNED by Peter Winder 
# Allsebrook 

on behalf of A. A. STUART 
& SONS (CONTRACTORS) 
LIMITED in the presence 
of :- 



(Sgd. ) P.W. ALLSEBROOK 
(6d stamp) 



C.B. Pope, 

10, Upper Grosvenor Street, 
London, W.l. 



9 . 

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APPENDIX F 



Copy of letter from Messrs Mac lay Murray & Spens, 

Solicitors, Glasgow to Messrs McClure Waismith Brodie 
& Co, Solicitors, Glasgow dated 3th Aufust 1963. 

Messrs McClure Mai smith. Brodie & Co,, 

Solicitors, 

77 St. Vincent Street, 

GLASGOW C.2. I69 West George Street, 

GLASGOW C.2. 

3th August 1963. 

Dear Sirs, 

Atholl Mouses Ltd . 

We are writing on "behalf of our clients, the Bank of Scotland, 
to set out the terras- of the agreement -reached between the Bank and your 
clients, Sagit Trust Co. Limited ("Sagit") in regard to the proposed 
purchase by Sagit 1 s associated Company, A. A. Stuart & Sons (Contractors) 
Limited. ("Stuart’ 1 ), of the Share Capital of Atholl Houses Ltd. ("Atholl"). 
This agreement is conditional on:- 

(1) Stuart acquiring on or before 8th August 1963, ("The Settlement Date") 

the whole Share Capital of Atholl from T..G. Tickler Ltd. ("Tickler") 
for One pound (£l) Sterling, 

(2) Stuart .obtaining before 31st July 1963 the agreement of all, or of as 

many as Stuart deem sufficient, trade creditors (including sub- 
contractors, Inland Revenue (so far as unsecured), Foster Clark Ltd., 
and Robroyston Brickworks Ltd.) to accept 5/-d. in the £ in full 
settlement of their claims against Atholl as at 23th February 1963 . 

(3) St. Martin Preserving Co. Ltd. ("St. Martin") agreeing to accept the 

sum of £81,000 from Atholl in full settlement of its claim of 
approximately £750,000 against Atholl. 

(4) Tickler agreeing to pay £31,000 to Atholl immediately in settlement of 

Atholl' s claim against Tickler of approximately £31,000. 

(5) The Commissioners of Inland Revenue withdrawing their petition for the 

winding up of Atholl and the -Provisional Liquidator of Atholl being 
discharged from his appointment as .such. 

If these conditions are fulfilled, the Bank and Sagit have 
agreed as follows 

I. Sagit will, immediately after the Settlement Date, provide from its 
own/ 

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- 2 - 



own resources or from sources independent of the Bank' and make 
continuously available to Atholl so far as reasonably required 
until completion of contracts current at the Settlement Date, 
including contracts completed but not yet- measured and contracts 
measured but not yet paid for (all hereinafter referred to as ' 
"current contracts"), or longer as required, the sum of £300,000. 

The Bank will provide Atholl with such additional finance not 
exceeding £100,000 in total as may reasonably be required from time 
to time by Atholl over and above the said sum of £ 300,000 to 
complete the said contracts. 

II. Immediately after the Settlement Date Sagit will procure Atholl to pay 
from the £ 300,000 provided by Sagit 

(a) The fee and outlays of the Provisional Liquidator and those 

of his professional advisers in respect of the period 
between the date of his appointment, viz, 24 th May I963, and 
the date of his discharge and all other expenditure incurred 
by him from and including .Monday 1 st July until the date of 
his discharge. Atholl will also take over all contracts and 
accept all commitments entered into by the Provisional 
Liquidator during his period of office and take all necessary 
steps to procure his discharge. 

(b) The Debts of the preferential creditors of Atholl (excluding 

that of the Bank) as at 28 th February 1963, amounting to 
approximately £33,000 in full. 

(c) A sum equivalent to 5 /- in the £ on the debts of all trade 

creditors (including sub-contractors, Inland Revenue 
(unsecured) Foster Clark Ltd. and Robroyston Brickworks Ltd.) 
as at 23 th February 1963; provided that if Sagit consider it 
expedient Stuart shall pay the said sum to and shall procure 
discharges from the said oredi-tors in which case Sagit will 
procure^ 

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- 3 - 



procure Atholl to reimburse Stuart forthwith out of the said sum 
of £300,000 for the whole cost of so doing. Provided that, 
notwithstanding the requirement of immediate payment to the said 
creditors, Atholl or Stuart as the case foay be shall have a 
reasonable opportunity before making payment to verify that the 
amounts claimed by such creditors are due by Atholl, 

III. Sagit will procure that Atholl will complete as expeditiously and' 

economically as possible all current contracts or such of those 
contracts as it may be agreed with the Bank should be completed at 
the rates and on the term3 originally agreed by the employers with 
Atholl or, if Atholl are able to negotiate rates more favourable to 
Atholl, at such other rate3. 

IV. Sagit will procure that on the completion of the current contracts 

(i.e. on final measurement of the last of such contracts) the then 
net current assets of Atholl i.e. as presently -existing and as 
generated in completing such contracts, including retentions but 
excluding fixed assets i.e. heritable property, plant and machinery, 
motor vehicles, office furniture and equipment (less instalment's 
under B.P. Agreements) loose plant and tools and interest in 
subsidiary, shall, after making reasonable provision for any 
unexpired maintenance obligations, be distributed as follows and 
in accordance with the following order of priority: - 

(a) In repaying any additional finance provided by the Bank in - 

accordance Vith paragraph I above, together with interest. 

(b) In repaying the loan by Sagit of £300,000 together with 

interest, and in paying to Sagit for each year or part year 
that they so act a. fee for their services as financial 
advisei’s to Atholl of £10,000 but the total fees so paid 
shall not in any event exceed £20,000. '* 

(.e) In paying to Stuart for each year or part year that they so 
act/ 

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_ 4 - 



act a fee for their services as managers of Atholl of 
£50,000 but the total . fee so paid shall not in any event 
exceed £100,000. 

(d) In paying the whole balance up to a total sum of £600,000 

to the Bank in repayment to the Bank of Atholl' s outstanding 
•overdraft; provided that Sagit proposes if in its sole 
discretion, it considers^ the result of completing the Current 
contracts has been sufficiently favourable to agree to the 
foregoing figure of £600,000 being increased to £650,000. 

Any balance thereafter of the then net current assets to be 
shared equally between Stuart and the Bank. The sums paid 
to the Bank under this sub-paragraph and under paragraph V. 
below shall be accepted by the Bank in full discharge of 
Atholl 's outstanding overdraft and interest. 

V. If during the period of completion of current contracts Atholl wish 

to take on new contracts, the approval of the Bank, which shall not 
be unreasonably withheld, is to be obtained. In calculating the 
amounts available for distribution to the Bank, Stuart and Sagit 
under the previous paragraph all transactions relating to and all 
assets and liabilities arising from such new contracts shall be kept 
separate and excluded in arriving at the figure of net current assets 
referred to in paragraph IV above. Sagit will procure that Atholl 
keep such separate books of account as will enable the necessary 
separation to be effected. A reasonable proportion (as certified, 
failing agreement, by an independent Chartered Accountant mutually 
chosen) of the overheads and of all fixed charges shall be borne by 
all such new contracts* 

VI. In addition to the payments by Atholl to the Bank under paragraph IV, 

Sagit agree to pay the Bank on completion of the current contracts 
one-half of- the value a.t that date (as fixed, failing agreement, by 
an/ 

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an independent valuer mutually chosen) of the fixed assets of 
Atholl taken over at the Settlement Date as referred to in , 
paragraph IV above and of any further fixed assets necessarily 
acquired to complete the .current contracts. 

VII. The Bank wild, be entitled at any time to examine the books of 

account of Atholl including the books relating to any new contracts 
taken on by Atholl under paragraph V. Sagit agree that, until 
this agreement has been fully implemented, the Bank shall be 
entitled to nominate one Director of Atholl and Sagit undertake 
to ensure his appointment. 

VIII. In the event of any dispute or difference arising between the Bank 
and Sagit as to the meaning or effect of their agreement or as to 
any matter whatsoever arising in relation thereto, such dispute 
or difference shall be referred to an Arbiter 1 chosen mutually and, 
failing agreement, to be appointed by the President for the time 



being of the Law Society of Scotland. 

Please confirm that these terms are agreed by you on behalf of 
your clients. 



Yours truly, 

(Sgd.) Maclay Murray & Spans 



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APPENDIX G 



ATHOLL HOUSES LTD. 



SUMMARISED APPROXIMATE OP ERA TING STATEMENT 
FOR P ERIOD FRCM 

1ST MARCH, 19S'3 TO 3QTH .SEPTEMBER, 



INCOME 

Work done and sundry sales 

Add: Closing Work in Progress 

Less: Opening Work in Progress 




3 . 526,208 

500 , 588 . 

3 , 826,796 

699.365 

3 , 127,431 


EXPENDITURE 




4 , 176,909 


mADmofioss) 




( 1 , 049,478 ) 


Add: Management Fees (oharged) 

SAGIT Trust Co. Ltd. 

A. A. Stuart & Sons (Contractors) Ltd. 




( 20,000 ) 
( 100,000 ) 


OPERATING CL0S3) 




( 1 , 169,478 ) 


Add: Investment in and Loan to 

subsidiary company written off 
Provision made for its 
deficiency 


( 25.000) 
( 25.047) 


( 50,047 ) 






(1,219,525 ) 


Less: Inoome Tax recoverable 
Sundry Loans received, 
not repayable 


12,578 

645.924 


658,502 

(561,023 ; 


Less: Increase in Capital Reserve 
Gain on Sale of Property 
( Loss )on Sale of Plant and Vehicles 


24,149 

( „:.gga) 


22^850 


(INCREASE) D) foEFIMEUrt ) 




(538.173 ) 


(DEFICIENCY )AT 28TH FEBRUARY. 1967 




(uanaa) 



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APPENDIX H 





ATHOLL HOUSES 


LTD. 




SUMMARISED DRAFT BALA! 


iOE FFJIJ'T’ 






AS AT 30TH SEFTEf©ER , 


• 1965. 






As revalued 


Aggregate 






lBt July, 1963 


Depreciation 






With Additions 


since 




?IXED ASSETS 


at Cost 


1st July, 1963 


Net 


Heritable Property 


£63,481 


5,669 


57,812 


Plant & Machinery 


49,338 


29,627 


19,711 


Motor Vehicles 


14,098 


9,075 


5*023 


Office Furniture & Equipment 13,405 


6,695 


..6,73 0 






gyo66 


89,256 


Loose Plant & Tools 


TOTAL FIXED ASSETS 




22h23. 



INTERES T IN SUBSIDIARY 

Shares at coot and advances (wholly written off) 
(Doficienoy )of Assets at dato (wholly provided for) 



FIXED ASSETS 



CURRENT ASSETS 

Stoolc in Trade - as valued by Company’s officials 24,376 
Work in Progress 300,588 
Sundry Debtors 61,382 
Income Tax recoverable 12,415 



398,761 



128,691 

( 85.0*171 
103,644 



LESS : CURRENT LIABILITIES 

Hire Furohase Accounts 453 

Amounts due to Subcontractors 63,454 

Sundry Creditors and Accrued Charges 28,806 

Balanoos payable under agreements with 
Creditors 19,107 

Income Tax 'deducted from Loan Interest 7,547 

Bank Overdraft - Current 52, 584 



NET CURRENT ASSETS 

ESTIMATED INITIAL SURPLU3 



iZliSSl 



aa6,8io 

330,454 



Less : Ranking Liabilities 

SAGIT Trust Co. Ltd. - Loan 

- .Fee to date 

A. A. Stuart & Sans (Contractors) Ltd. - Fee to date 
, Bank of Scotland - Share of Fixed Assets 

( DEFICIENCY) AF TER RANKING LIABILITIES 

Less ; Contingent Liability - Priraaz-y - Bank of Sootland 

( DEFICIENCY )AFIBR CONTINGENT LIABILITY ~ PRIMARY 
Less ; Contingent Liabilities - Secondary - 
Bank of Sootland 

A * A. Stuart & Sons (Contractors) Ltd. - 
Balance of Old Trade - Ac 0 aunts 

( DEFICIENCY )AFTER CONTINGENT LIABILITIES - SECONDARY 

REPRESENTING ;- 



300,000 

20,000 

100,000 

51,822 471,822 

(141.368) 
600,000 

(741.368) 

820,995 

S82t%8 .1,314,354 

( £2,055,692) 



ISSUED SHARE CAPITA!, 

CAPITAL RESERVE 

(DEBIT )BAIAHCE ON PROSIT AND LOSS ACCOUNT 



(• 



60,700 

22,850 

2,3,39,24 2 )(?.2,055,6pg? 



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APPENDIX J 



Overseas American Finance Company 

LIMITED 







LT. COL. THE HON. RANDAL PLUNK! 



2, BALFOUR PLACE 
LONDON, W.t. 



HYDE PARK 4353-7 



BENTLEYS 



PRIVATE AND CONFIDENTIAL 

To Shareholders of: — 



30th October, 1956. 



T. G. TICKLER, LTD. 



Dear Sir (or Madam), 

Beit Scott & Company .Limited have authorised us to make on their behalf 
an offer to purchase for cash your holding of the shares of T. G. Tickler Ltd. 
on the following terms : — 

1. For the 5£% Cumulative Preference Shares 20/- in cash for each such 
Preference Share. 

2. For the 71% Cumulative Preference Shares 22/- in cash for each such 
Preference Share. 

3. For the Ordinary Shares 18/9d. in cash for each such Ordinary Share. 

4. The purchase will be conditional upon : — 

(a) acceptances being received in respect of not less than 90 per cent of 
all the issued Shares in T. G. Tickler Ltd. (or such lesser percentage as the 
Directors of Beit Scott & Co., Ltd. may decide) not later than noon on 
1 6th November, 1956 (unless a later date for acceptances shall be announced 
by the Directors of Beit Scott & Co., Ltd.) and 

(b) the purchasers being satisfied that the asset position of T. G. Tickler Ltd. 
as at the 1st October, 1956 has been substantially maintained and preserved 
down to the date of the sale becoming effective. 

5. The purchasers will be entitled to any dividends declared or paid on the said 
shares on or after the date of this letter. 

If you wish to sell your holding, acceptance of this offer should be made on 
the accompanying form of acceptance completed in accordance with the instruc- 
tions thereon and sent to us as soon as possible but in any event not later than in 
time to reach this office by noon on the 16th November, 1956. 

Within seven days of the closing date for acceptances whether as originally 
fixed or as subsequently extended you will be notified whether or not the offer has 
become unconditional. 

Please do not forward your Share Certificates or a transfer at this stage. 
If acceptances are received in respect of a sufficient percentage of Shares we will 
send you instructions as to delivery of your Shares to a Bank against payment in 
cash for such Shares. 



Yours faithfully. 
For and on behalf of 



OVERSEAS AMERICAN FINANCE COMPANY LIMITED 



S. EDEN BUSHELL 

Managing Director 



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APPENDIX K 









i£>t jllartnt 

Jfrejfertung Co. Httr. 

MAIDENHEAD 

BERKS 

TELE { "CHUNK?” MA?DENH^D 



eiMCTORS 




SE CRETAR Y 

U. E. SEAMAN, A.C.A. 



1th February, 1958 



To the Members 



Dear Sir or Madam 



T. G. TICKLER LIMITED 



1. You will recall that in January, 1957, your company entered into a trading agreement with 
T; G. Tickler Limited designed to benefit your company. This resulted in a substantial improvement 
m your company’s trading position and following thereon your directors were of the opinion that the 
position could be still further improved and consolidated if control of T. G. Tickler Limited could be 
secured. Accordingly, your company has acquired from Mr. R. N. Scott and Sir Alfred Beit both 
directors of your company their controlling shareholding in T. G. Tickler Limited as follows-— 



Shares of £1 each fully paid 

Ordinary Shares 

'5 1 % Cumulative Preference Shares . . 
1\% “B” Cumulative Preference Shares 



the consideration receivable by Mr. R. N. Scott and Sir Alfred Beit is £600,000 cash and 1,500 000 
shares of 4/- each m the capital of your company credited as fully paid and ranking pari passu with 
the existing shares of the company except that they will not rank for any dividend which may be declared 
m respect of the year ending 31st March, 1958. Application has been made to The Council of the 
Stock Exchange London for permission to deal in and quotation for these shares. Mr. R. N Scott 
and Sir Alfred Beit previously controlled 845,000 shares in your company and as a result of this trans- 
action now control 2,345,000 shares. 

2 . T.G. Tickler Limited was incorporated on the 14th July, 19il. It carries on a substantial 

business as preserve manufacturers. It has a number of subsidiary companies, including Crosbie’s 
Pure Food Co. Limited and Barnes & Co. Limited, none of whom trade for their own account their 
trading results being incorporated with those of T. G. Tickler Limited. Under the agreement of 
January, 1957, your company receives the whole of T. G. Tickler’s production. This agreement 
and the resulting co-operation between the companies has proved to be beneficial to both. 

3. • T. G. Tickler Limited also has a wholly owned subsidiary Atholl Houses Limited, a company 
incorporated on the 1st February, 1944. This company is engaged in building and construction and 
has an excellent profit record. 

4. The following is a copy of a report which has been received from Messrs. James Meston & Co. 
Chartered Accountants, the auditors to your company: — 



Total acquired 

Total Issued by your Company 
320,000 319,157 

40,000 40,000 

49,203 49,103 

409,203 408,260 



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To the Directors, 

St. Martin Preserving Co. Limited 1 Lbadenhall Street, 

London, E.C.3 

Gentlemen 5t/; February, 1958 

Wo have examined the audited accounts of T. G. Tickler Limited and its subsidiary company, 
Atholl Houses Limited, for the 10 years ended 31st December, 1957, and we report that: — 

1. Profits 

The profits and losses of T. G. Tickler Limited and Atholl Houses Limited,' as shown by the 
Profit and Loss Accounts, were as follows: — 



(a) T. G. Tickler Limited 




Profits as 
defined below 
before charging 
depreciation 
£ 


Depreciation 

£ 


Profits as 
defined below 
after charging 
depreciation 
£ 


Year ended 30th April 


1948 


147,902 


12,739 


135,163 


1949 


233,248 

53,299 


21,676 


211,572 


1950 


18,968 


34,331 


1951 


148,336 


22,807 


125,529 


1952 


70,803 


33,925 


36,878 


1953 


5,738 (Loss) 
58,908 „ 


32,821 


38,559 (Loss) 


1954 


27,684 


86,592 „ 


1955 


73,119 „ 


20,785 


93,904 „ 


1956 


86,061 „ 


16,095 


102,156 „ 


1957 


17,096 „ 


.19,755 


36,851 „ 


Period to 31st December 


1957 


31,974 (Profit) 


5,887 


26,087 (Profit) 


( b ) Atholl Houses Limited 


Year ended 31st December 

1948 52,300 


6,000 


46,300 


1949 


44,773 


4,000 


40,773 


1950 


54,407 


2,500 


51,907 


1951 


61,720 


2,500 


59,220 


1952 


63,811 


2,500 


61,311 


1953 


45,437 


1,500 


43,937 


1954 


210,318 


3,000 


207,318 


1955 


57,759 

87,568 


3,000 


54,759 


1956 


6,000 


81,568 


1957 


46,393 


6,000 


40,393 



The profits and losses set out above are arrived at: 

(a) Before providing for United Kingdom taxation. 

( b ) Before charging the emoluments of the directors of T. G. Tickler Limited and Atholl Houses Limited. 

(c) After charging all other expenses. 

(d) After making such other adjustments as we consider appropriate. 



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The book value of the net assets of T. G. Tickler Limited and Atholl Houses Limited as shown 
by the consolidated balance sheet as at 31st December, 1957, was as follows: — 

Fixed Assets 

Freehold Property at professional valuation, Decem- 



ber, 1956 £207,350 

Other Freehold and Heritable Properties at cost . . 19,999 

£227,349 

Plant, Machinery and Fittings at cost less proceeds 

of sales 155,351 

Motor Vehicles at cost .. .. .. .. .. 44,581 

Loose Plant and Tools as valued by company’s officials 6,047 

Trade Investments at cost 67 

Goodwill and Trade Marks at cost 37,364 



470,759 

Current Assets 

Stock in Trade as valued by company’s officials 
Work in Progress as valued by company’s officials . . 

Sundry Debtors and Prepayments 

Temporary Loans to associated companies and others 

Estimated Income Tax repayable 

Balance at Bankers and Cash in Hand 



.1,013,923 470,759 



£4,746 

208,629 

72,255 

18,394 

73,000 

636,899 

1,013,923 



Liabilities 



Sundry Creditors, accrued charges and provisions . . 342,335 

Provisions for superannuation .. .. .. .. 18,843 

Current Taxation . . . . . . . . . . 57,660 

418,838 

595,085 



1,065,844 

Less: Loan Capital 

4|- % Twelve year Unsecured Loan Stock 1959-63 200,000 

865,844 

Less: Reserve for depreciation 154,308 

Provision for future Income Tax .. .. 16,000 

170,308 

Book value of Consolidated Net Assets . . . . £695,536 



The book value of the consolidated net assets set out above is subject to profits tax non-distribution 
relief which has been granted. In the event of subsequent distributions exceeding profits earned after 
31st December, 1957, it may be withdrawn in whole or in part. 

Yours faithfully, 

JAMES MESTON & CO. 



44 



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Your directors are satisfied that the acquisition of shares in T. G. Tickler Limited will 
prove to be a valuable investment by your company. It will be noted from the Accountants’ report 
that the present annual profits are at the rate of approximately £90,000 before depreciation. The 
directorsconsider the provision for depreciation to be excessive and estimate the future annual charge 
at £11,000. On the information available to them your directors are of the opinion that the profits of 
the new subsidiaries should continue at the rate of not less than £50,000 per annum before tax. 

6. Copies of the minutes of the meeting of directors at which this transaction was completed, 
the report of your company’s auditors, as set out above, together with statements of their adjustments 
and the accounts of the two new subsidiary companies for their last two financial periods may be 
inspected by any member at the company’s registered office at Maidenhead and at the offices of 
Messrs. James Meston & Co., Chartered Accountants, 1 Leadenhall Street, London, E.C.3, during 
usual business hours on any week day (except Saturday) up to and including 21st February, 1958. 



Yours faithfully. 



R. N. SCOTT, 

Chairman. 



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APPENDIX L 

The permission given by the Board of Trade under the Prevention of Fraud (Investments) Act 1958, for the distribution 
of these documents does not imply approval by them of the terms of the offer or responsibility for any of the statements 
made or for the soundness of any of the opinions expressed. 



MAIDENHEAD • BERKS. 
Tiki MAIDENHEAD 3170/3 



ELY • CAMqs. 

T«L! ELY aees/s 



ORIMSBY ■ LINCS. 
TBL I ORIMSBY 8B471 






t. Harttn 

iPtetfer&utg Co. 3ltb. 

2. BALFOUR PLACE 
LONDON W. 1. 

Tilkfhoni I OROSVENOR 74Ss/s 

INLAND! 'CHUNKY' LONDON TELEX 
OviHUII ‘CHUNKY* LONDON 




H. J. OUNTRI Pi A.C.I.S. 



L. E. SEAMAN. A.C.A. 



io the Ordinary Stockholders of 
Dear Sir or Madam, 



FOSTER CLARK LIMITED 



23rd December, 1959 



In accordance with our letter to the Board of Foster Clark Limited dated 16th December, 1959, St. Martin 
Preserving Company Limited hereby offer to acquire the whole of the issued Ordinary Stock Units of 10/- 
each of Foster Clark Limited on the following terms: 

1 . In exchange for every one (1) Ordinary Stock Unit of 10/- each of Foster Clark Limited, St. Maxtin Preserving 
Company Limited will issue three (3) of its own Ordinary shares of 4/- each fully paid. 

2. The offer is conditional upon acceptances being received in respect of not less than 90 % of all the issued 
Ordinary Stock Units of 10/- each in Foster Clark Limited not later than 14th January, 1960 (or such lesser 
percentage and at such later date, not being later than 29th February, 1960, as the Directors of St. Martin 
Preserving Company Limited may decide to accept). 

3. The St. Martin Preserving Company Limited shares to be issued in respect of this offer will rank as from 
the date of issue pari passu with the existing Ordinary shares of the Company. 

In the event of acceptances being received in respect of more than 90% of the Ordinary Stock (or such lesser 
percentage as the Directors of St. Martin Preserving Company Limited may decide to accept), this offer will become 
unconditional and an announcement will then be made in the Press. 



If you wish to exchange your holding, acceptance of this offer should be made on the accompanying form of 
acceptance completed in accordance with the instructions thereon and sent to us, together with your stock 
certificate^) if available, as soon as possible, but in any event not later than in time to reach this office by noon 
on 14th January, 1960. 

If the offer becomes unconditional, share certificate(s) in respect of the shares to be allocated will be despatched 
within 21 days of the closing of this offer. 

If the offer should not become unconditional the form of acceptance and transfer and the Foster Clark 
Limited stock certificate^) will be returned by post. 

Application will be made to the Council of the Stock Exchange, London, for permission to deal in and 
quotation for the new shares in St. Martin Preserving Company Limited to be issued in tire event of this offer 
becoming unconditional. 

A copy of the Memorandum and Articles of Association of St. Martin Preserving Company Limited and a 
copy of the last published Accounts will be available for inspection at Martins Bank Limited, 68 Lombard Street, 
London, E.C.3., during normal working hours, excluding Saturdays, up to and including the day this offer closes. 

Latest available middle market quotations are as follows: 

ST. MARTIN FOSTER CLARK 

On 16th December, 1959 . . . . . . . . 7/7-Jd. 13/6d. 

(immediately before this offer was made public). 

Latest quotations (21st December, 1959) .. .. 7/10*d. 21/6d. 

The present issued Share Capital of St. Martin Preserving Company Limited is £760,000. If there is a 100 % 
acceptance of this offer, the issued Share Capital will be £1,390,000. 

The net trading profits (after taxation) of St. Martin Preserving Company Limited for the three years ended 
31st March, 1959 were: 



£ 

Year ended 31st March, 1957 21,675 

Year ended 31st March, 1958 46,956 

Year ended 31st March, 1959 97,994 

Other than in the normal course of trading, there has been no material change in the financial position of 
St. Martin Preserving Company Limited since the last published accounts. 

St. Martin Preserving Company Limited have the intention on acquiring the business of Foster Clark Limited 
to continue the undertaking of that Company with the assistance of its present executives and employees with 
the object of the further development and expansion of its products. 

Yours faithfully, 
for and on behalf of 

ST. MARTIN PRESERVING COMPANY LIMITED 
L. E. SEAMAN, 

Secretary. 



Ordinary Dividend for year 
Less Income Tax 
% £ 

5 9,344 

10 26,450 

12* 58,188 



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APPENDIX M 



List of individuals who gave oral evidence to the inspector appointed by the Board of Trade 
Mr. P. W. Allsebrook 

Managing Director, Sagit Trust Company Limited 
Sir Alfred Beit, Bt. 

Director, St. Martin Preserving Company Limited 
Mr. G. H. Cann 

Partner, Thorne, Lancaster & Co., Auditors of Foster Clark Limited 
Mr. W. J. L. Clarke 

Partner, Hodgson, Harris & Co., Auditors of T. G. Tickler Limited 

Mr. W. H. Durlac 

Partner, Hogg, Bullimore & Co. 

Mr. J. P. Fyfe 

Partner, John Dansken & Purdie, Surveyors appointed by the Bank of Scotland 

Mr. W. H. Haddow 

Assistant Treasurer, Bank of Scotland 

Mr. J. E. Hiscock 

Managing Director, A. A. Stuart & Sons ( Contractors ) Limited 
Mr. S. R. Hogg 

Receiver and Manager, St. Martin Preserving Company Limited 
Mr. M. Lambie 

Director, Atholl Houses Limited 

Mr. W. M. Y. Oswald 

Director, Atholl Houses Limited 

Mr. D. J. Pyne-Gilbert 

Partner, Thorne, Lancaster & Co., Auditors of Foster Clark Limited 
Mr. T. N. Risk 

Partner, Maclay, Murray and Spens, Solicitors acting for the Bank of Scotland 
Mr. R. N. Scott 

Chairman, St. Martin Preserving Company Limited 
Mr. D. Thompson 

Partner, Surman, Leat & Co., Successor firm to Eric Phillips & Co., Auditors of Atholl 
Houses Limited and T. G. Tickler Limited 

Mr. J. Waldie 

Partner, Thomson McLintock & Co., Glasgow, Provisional Liquidator of Atholl Houses 
Limited 

Sir William Watson 

Treasurer, Bank of Scotland 

Mr. W. D. Wilson 

Partner, Hogg, Bullimore & Co. 

Mr. G. Wright 

Director, Sagit Trust Company Limited 




Printed In England for Her Majesty’s Stationery Office by A. Wheaton & Co. Ltd., Exeter. 



Dd. 115929 K6 9/66 



47 



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op. 1100.3. *3 1 




BOARD OF TRADE 



Investigation 

into the affairs of St. Martin 
Preserving Company Limited 



REPORT BY 

MR. J. D. RUSSELL. M.A., f.c.a. 

( Inspector appointed by the Board of Trade 
in accordance with the provisions of 
Section 165(b) of the Companies Act 1948) 



LONDON: HER MAJESTY’S STATIONERY OFFICE 

PRICE 6s. 6 d. NET 



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CONTENTS 

Page 

Terms of appointment 1 

Background to appointment 1 

The sale of Atholl Houses Limited 2 

Result of investigation 2 

Background to the transaction 2 

Financial position of Atholl at 28th February 1963 3 

Impending liquidation of Atholl 3 

The sale agreement 4 

Criticisms by Mr. Scott 5 

Valuation of work in progress 5 

Continuance of bank guarantee 7 

Offer by shareholders 7 

Arrangement for further finance 8 

Other matters raised by Mr. Scott 8 

Financial position of Atholl at 30th September 1965 9 

Conclusions on the Atholl transaction 9 

The St. Martin merger 10 

Situation at the beginning of 1956 10 

Events in 1956 10 

1957-1958 11 

1959-1960 11 

Scope of investigation 12 

Evidence 12 

Appendices 

A The St. Martin group at 1st January 1963 13 

B St. Martin circular to shareholders, 2nd November 1963 14 

C Mr. S. R. Hogg’s circular to creditors, 29th April 1963 17 

D Letter to creditors from McGrigor, Donald & Co., 7th June 1963 21 

E Sale agreement dated 30th July 1963 24 

F Letter from Maclay, Murray & Spens to McClure, Naismith, Brodie & Co. 

dated 8th August 1963 33 

G Summarised approximate operating statement of Atholl Houses Limited ... 38 

H Summarised draft Balance Sheet of Atholl Houses Limited at 30th September 

1965 39 

I Steps by which the St. Martin group of companies were brought together 40 

J Circular letter to shareholders of T. G. Tickler Limited dated 30th October 

1956 41 

K Circular letter to shareholders of T. G. Tickler Limited dated 7th February 

1958 42 

L Circular letter to shareholders of Foster Clark Limited dated 23rd December 

1959 46 

M List of individuals who gave oral evidence 47 

63034 — B 

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